UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________ 
FORM 10-Q
________________________ 

		
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the Quarterly Period Ended June 30, 2016
OR

		
¨
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the Transition Period from              to
Commission File Number: 000-50404
________________________ 
LKQ CORPORATION
(Exact name of registrant as specified in its charter)
________________________ 

			
DELAWARE	 	36-4215970	
(State or other jurisdiction of
incorporation or organization)	 	(I.R.S. Employer
Identification No.)	
 	 	 	
500 WEST MADISON STREET,
SUITE 2800, CHICAGO, IL	 	60661	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: (312) 621-1950
________________________ 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

				
Large accelerated filer	x	Accelerated filer	¨	
Non-accelerated filer	¨   (Do not check if a smaller reporting company)	Smaller reporting company	¨	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨     No  x
At July 22, 2016 , the registrant had issued and outstanding an aggregate of 307,107,596 shares of Common Stock.

	

PART I
FINANCIAL INFORMATION

Item 1.     Financial Statements

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)	
								
 	June 30,	 	December 31,	
 	2016	 	2015	
Assets	 	 	 	
Current Assets:	 	 	 	
Cash and equivalents	$	273,203		 	$	87,397		
Receivables, net	995,153		 	590,160		
Inventories, net	1,890,536		 	1,556,552		
Prepaid expenses and other current assets	139,536		 	106,603		
Total Current Assets	3,298,428		 	2,340,712		
Property, Plant and Equipment, net	1,055,046		 	696,567		
Intangible Assets:	 	 	 	
Goodwill	3,059,488		 	2,319,246		
Other intangibles, net	630,360		 	215,117		
Other Assets	142,622		 	76,195		
Total Assets	$	8,185,944		 	$	5,647,837		
Liabilities and Stockholders’ Equity	 	 	 	
Current Liabilities:	 	 	 	
Accounts payable	$	735,138		 	$	415,588		
Accrued expenses:	 	 	 	
Accrued payroll-related liabilities	102,962		 	86,527		
Other accrued expenses	228,656		 	162,225		
Other current liabilities	40,794		 	31,596		
Current portion of long-term obligations	60,832		 	56,034		
Total Current Liabilities	1,168,382		 	751,970		
Long-Term Obligations, Excluding Current Portion	3,274,629		 	1,528,668		
Deferred Income Taxes	225,338		 	127,239		
Other Noncurrent Liabilities	209,956		 	125,278		
Commitments and Contingencies		 		
Stockholders’ Equity:	 	 	 	
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 306,785,582 and 305,574,384 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	3,067		 	3,055		
Additional paid-in capital	1,111,221		 	1,090,713		
Retained earnings	2,374,853		 	2,126,384		
Accumulated other comprehensive loss	(181,502	)	 	(105,470	)	
Total Stockholders’ Equity	3,307,639		 	3,114,682		
Total Liabilities and Stockholders’ Equity	$	8,185,944		 	$	5,647,837		

See notes to unaudited condensed consolidated financial statements
2

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)	
																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Revenue	$	2,450,693		 	$	1,838,070		 	$	4,372,169		 	$	3,611,982		
Cost of goods sold	1,528,746		 	1,114,126		 	2,689,785		 	2,188,559		
Gross margin	921,947		 	723,944		 	1,682,384		 	1,423,423		
Facility and warehouse expenses	178,670		 	136,379		 	336,275		 	269,036		
Distribution expenses	184,331		 	150,039		 	336,674		 	291,753		
Selling, general and administrative expenses	254,153		 	205,796		 	472,471		 	409,037		
Restructuring and acquisition related expenses	9,080		 	1,663		 	23,891		 	8,151		
Depreciation and amortization	52,529		 	29,782		 	84,217		 	59,235		
Operating income	243,184		 	200,285		 	428,856		 	386,211		
Other expense (income):	 	 	 	 	 	 	 	
Interest expense, net	26,381		 	14,622		 	40,973		 	29,528		
Loss on debt extinguishment	—		 	—		 	26,650		 	—		
Gains on foreign exchange contracts - acquisition related	—		 	—		 	(18,342	)	 	—		
Other expense (income), net	1,339		 	97		 	(1,550	)	 	2,016		
Total other expense, net	27,720		 	14,719		 	47,731		 	31,544		
Income before provision for income taxes	215,464		 	185,566		 	381,125		 	354,667		
Provision for income taxes	74,874		 	64,682		 	132,441		 	124,780		
Equity in earnings of unconsolidated subsidiaries	147		 	(1,162	)	 	(215	)	 	(3,070	)	
Net income	$	140,737		 	$	119,722		 	$	248,469		 	$	226,817		
Earnings per share:	 	 	 	 	 	 	 	
Basic	$	0.46		 	$	0.39		 	$	0.81		 	$	0.75		
Diluted	$	0.46		 	$	0.39		 	$	0.81		 	$	0.74		

Unaudited Condensed Consolidated Statements of Comprehensive Income
(In thousands)	
																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Net income	$	140,737		 	$	119,722		 	$	248,469		 	$	226,817		
Other comprehensive (loss) income:	 	 	 	 	 	 	 	
Foreign currency translation	(73,257	)	 	44,510		 	(73,117	)	 	(10,300	)	
Net change in unrecognized gains/losses on derivative instruments, net of tax	(3,614	)	 	918		 	(3,182	)	 	1,201		
Net change in unrealized gains/losses on pension plans, net of tax	120		 	(21	)	 	267		 	107		
Total other comprehensive (loss) income	(76,751	)	 	45,407		 	(76,032	)	 	(8,992	)	
Total comprehensive income	$	63,986		 	$	165,129		 	$	172,437		 	$	217,825		

See notes to unaudited condensed consolidated financial statements
3

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)	
								
 	Six Months Ended	
 	June 30,	
 	2016	 	2015	
CASH FLOWS FROM OPERATING ACTIVITIES:	 	 	 	
Net income	$	248,469		 	$	226,817		
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	
Depreciation and amortization	90,882		 	61,714		
Stock-based compensation expense	11,425		 	11,114		
Excess tax benefit from stock-based payments	(6,685	)	 	(6,737	)	
Loss on debt extinguishment	26,650		 	—		
Gains on foreign exchange contracts - acquisition related	(18,342	)	 	—		
Other	7,193		 	5,880		
Changes in operating assets and liabilities, net of effects from acquisitions:	 	 	 	
Receivables, net	(83,515	)	 	(48,995	)	
Inventories, net	42,548		 	38,399		
Prepaid income taxes/income taxes payable	23,029		 	21,052		
Accounts payable	31,004		 	(18,597	)	
Other operating assets and liabilities	(17,428	)	 	(7,948	)	
Net cash provided by operating activities	355,230		 	282,699		
CASH FLOWS FROM INVESTING ACTIVITIES:	 	 	 	
Purchases of property, plant and equipment	(102,319	)	 	(66,763	)	
Acquisitions, net of cash acquired	(1,268,841	)	 	(37,208	)	
Proceeds from foreign exchange contracts	18,342		 	—		
Other investing activities, net	11,313		 	(5,209	)	
Net cash used in investing activities	(1,341,505	)	 	(109,180	)	
CASH FLOWS FROM FINANCING ACTIVITIES:	 	 	 	
Proceeds from exercise of stock options	4,889		 	3,288		
Excess tax benefit from stock-based payments	6,685		 	6,737		
Taxes paid related to net share settlements of stock-based compensation awards	(2,281	)	 	(5,243	)	
Debt issuance costs	(16,171	)	 	—		
Proceeds from issuance of Euro notes	563,450		 	—		
Borrowings under revolving credit facilities	1,822,020		 	199,621		
Repayments under revolving credit facilities	(1,012,362	)	 	(294,276	)	
Borrowings under term loans	338,478		 	—		
Repayments under term loans	(4,721	)	 	(11,250	)	
Borrowings under receivables securitization facility	97,000		 	2,100		
Repayments under receivables securitization facility	(66,480	)	 	(1,758	)	
Repayments of other debt, net	(7,824	)	 	(42,090	)	
Repayment of Rhiag debt and related payments	(543,347	)	 	—		
Payments of other obligations	(1,371	)	 	(2,050	)	
Net cash provided by (used in) financing activities	1,177,965		 	(144,921	)	
Effect of exchange rate changes on cash and equivalents	(5,884	)	 	220		
Net increase in cash and equivalents	185,806		 	28,818		
Cash and equivalents, beginning of period	87,397		 	114,605		
Cash and equivalents, end of period	$	273,203		 	$	143,423		
Supplemental disclosure of cash paid for:	 	 	 	
Income taxes, net of refunds	$	115,346		 	$	102,747		
Interest	42,340		 	28,656		
Supplemental disclosure of noncash investing and financing activities:	 	 	 	
Notes payable and other financing obligations, including notes issued and debt assumed in connection with business acquisitions	$	555,335		 	$	4,366		
Noncash property, plant and equipment additions	3,555		 	4,387		

See notes to unaudited condensed consolidated financial statements
4

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)	
																							
 	Common Stock	 	Additional Paid-In Capital	 	Retained
Earnings	 	Accumulated
Other
Comprehensive
(Loss) Income	 	Total
Stockholders’
Equity	
 	Shares
Issued	 	Amount	 								
BALANCE, January 1, 2016	305,574		 	$	3,055		 	$	1,090,713		 	$	2,126,384		 	$	(105,470	)	 	$	3,114,682		
Net income	—		 	—		 	—		 	248,469		 	—		 	248,469		
Other comprehensive income	—		 	—		 	—		 	—		 	(76,032	)	 	(76,032	)	
Restricted stock units vested, net of shares withheld for employee tax	519		 	5		 	(2,286	)	 	—		 	—		 	(2,281	)	
Stock-based compensation expense	—		 	—		 	11,425		 	—		 	—		 	11,425		
Exercise of stock options	693		 	7		 	4,882		 	—		 	—		 	4,889		
Excess tax benefit from stock-based payments	—		 	—		 	6,487		 	—		 	—		 	6,487		
BALANCE, June 30, 2016	306,786		 	$	3,067		 	$	1,111,221		 	$	2,374,853		 	$	(181,502	)	 	$	3,307,639		

See notes to unaudited condensed consolidated financial statements
5

LKQ CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements

Note 1.	Interim Financial Statements	
The unaudited financial statements presented in this report represent the consolidation of LKQ Corporation, a Delaware corporation, and its subsidiaries. LKQ Corporation is a holding company and all operations are conducted by subsidiaries. When the terms "LKQ," "the Company," "we," "us," or "our" are used in this document, those terms refer to LKQ Corporation and its consolidated subsidiaries.
We have prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial statements. Accordingly, certain information related to our significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include only normally recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.
Operating results for interim periods are not necessarily indicative of the results that can be expected for any subsequent interim period or for a full year. These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our most recent Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 25, 2016.
As described in Note 2, "Business Combinations ," on April 21, 2016, we completed our acquisition of Pittsburgh Glass Works LLC ("PGW"), a leading global distributor and manufacturer of automotive glass products. With our acquisition of PGW, we present an additional reportable segment, Glass. Our unaudited condensed consolidated financial statements reflect the impact of PGW from the date of acquisition through the end of the quarter.

		
Note 2.	Business Combinations	

On March 18, 2016, LKQ and its wholly-owned subsidiary LKQ Italia S.r.l. acquired Rhiag-Inter Auto Parts Italia S.p.A. ("Rhiag"), a distributor of aftermarket spare parts for passenger cars and commercial vehicles in Italy, Czech Republic, Slovakia, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Poland and Spain. This acquisition expands LKQ's geographic presence in continental Europe, and we believe the acquisition will generate potential purchasing synergies. Total acquisition date fair value of the consideration for our Rhiag acquisition was €534.2 million ( $602.0 million ), composed of €533.6 million ( $601.4 million ) of cash (net of cash acquired) and €0.6 million ( $0.6 million ) of intercompany balances considered to be effectively settled as part of the transaction. In addition, we assumed €488.8 million ( $550.8 million ) of existing Rhiag debt as of the acquisition date.
To fund the purchase price of the Rhiag acquisition, LKQ entered into foreign currency forward contracts in March 2016 to acquire a total of €588 million . The rates locked in under the foreign currency forwards were favorable to the spot rate on the settlement date, and as a result, these derivative contracts generated a gain of $18.3 million during the three months ended March 31, 2016. The gain on the foreign currency forwards is recorded in Gains on foreign exchange contracts - acquisition related on our unaudited condensed consolidated statement of income for the six months ended June 30, 2016 .     
We recorded $585.1 million of goodwill related to our acquisition of Rhiag, which we do not expect to be deductible for income tax purposes. In the period between the acquisition date and June 30, 2016 , Rhiag, which is reported in our Europe reportable segment, generated revenue of $318.1 million and operating income of $10.8 million , which included $6.2 million of acquisition related costs.
On April 21, 2016, LKQ and its wholly owned subsidiary LKQ PGW Holdings LLC acquired PGW. PGW’s business comprises wholesale and retail distribution services, automotive glass manufacturing, and retailer alliance partnerships. The acquisition expands our addressable market in North America and globally. Additionally, we believe the acquisition will create potential distribution synergies with our existing network. Total acquisition date fair value of the consideration for our PGW acquisition was $661.9 million , consisting of cash paid (net of cash acquired). We recorded $184.0 million of goodwill related to our acquisition of PGW, of which we expect $84.5 million to be deductible for income tax purposes. In the period between the acquisition date and June 30, 2016 , PGW generated revenue of $210.1 million and operating income of $8.9 million .
In addition to our acquisitions of Rhiag and PGW, we acquired two wholesale businesses in Europe during the six months ended June 30, 2016 . These acquisitions were not material to our results of operations or financial position.

6

During 2015, we completed 18 acquisitions, including 4 wholesale businesses in North America, 12 wholesale businesses in Europe, a self service retail operation, and a specialty vehicle aftermarket business. Our wholesale business acquisitions in North America included PartsChannel, Inc. ("Parts Channel"), an aftermarket collision parts distributor. The specialty aftermarket business acquired was The Coast Distribution System, Inc. ("Coast"), a supplier of replacement parts, supplies and accessories in North America for the recreational vehicle and outdoor recreation markets. Our European acquisitions included 11 aftermarket parts distribution businesses in the Netherlands, 9 of which were former customers of and distributors for our Netherlands subsidiary, Sator Beheer B.V. ("Sator") and were acquired with the objective of expanding our distribution network in the Netherlands. Our other acquisitions completed during 2015 enabled us to expand our geographic presence. Total acquisition date fair value of the consideration for these acquisitions was $187.9 million , composed of $161.3 million of cash (net of cash acquired), $4.3 million of notes payable, $21.2 million of other purchase price obligations, and $ 1.1 million of pre-existing balances between us and the acquired entities considered to be effectively settled as a result of the acquisitions. During the year ended December 31, 2015 , we recorded $92.2 million of goodwill related to these acquisitions and immaterial adjustments to preliminary purchase price allocations related to certain of our 2014 acquisitions. We expect $69.9 million of the $92.2 million of goodwill recorded to be deductible for income tax purposes.
Our acquisitions are accounted for under the purchase method of accounting and are included in our unaudited condensed consolidated financial statements from the dates of acquisition. The purchase prices were allocated to the net assets acquired based upon estimated fair market values at the dates of acquisition. The purchase price allocations for the acquisitions made during the  six months ended   June 30, 2016  and the last six months of  2015  are preliminary as we are in the process of determining the following: 1) valuation amounts for certain receivables, inventories and fixed assets acquired; 2) valuation amounts for certain intangible assets acquired; 3) the acquisition date fair value of certain liabilities assumed; and 4) the final estimation of the tax basis of the entities acquired. We have recorded preliminary estimates for certain of the items noted above and will record adjustments, if any, to the preliminary amounts upon finalization of the valuations. During the three months ended June 30, 2016 , we recorded adjustments to our preliminary allocation based on our valuation procedures for our acquisition of Rhiag that resulted in the allocation of $155 million of goodwill to acquired assets, primarily intangible assets and property, plant and equipment. Additionally, as Rhiag was acquired at the end of the first quarter the income statement effect of these adjustments on our earnings was immaterial for the three months ended March 31, 2016. The balance sheet impact and income statement effect of other measurement-period adjustments recorded for acquisitions completed in prior periods was immaterial.
The preliminary purchase price allocations for the acquisitions completed during the six months ended June 30, 2016 and the year ended December 31, 2015 are as follows (in thousands):

																				
 	Six Months Ended	 	Year Ended	
 	June 30, 2016	 	December 31, 2015	
 	Rhiag	 	PGW	 	Other Acquisitions	 	Total	 	All Acquisitions	
Receivables	$	235,358		 	$	136,529		 	$	996		 	$	372,883		 	$	29,628		
Receivable reserves	(28,243	)	 	(6,146	)	 	(53	)	 	(34,442	)	 	(3,926	)	
Inventories, net (1)	239,559		 	169,558		 	840		 	409,957		 	79,646		
Prepaid expenses and other current assets	14,465		 	38,762		 	(13	)	 	53,214		 	3,337		
Property, plant and equipment	58,275		 	271,641		 	431		 	330,347		 	11,989		
Goodwill	585,112		 	183,970		 	5,107		 	774,189		 	92,175		
Other intangibles	424,754		 	31,126		 	—		 	455,880		 	9,926		
Other assets	2,101		 	57,396		 	(407	)	 	59,090		 	5,166		
Deferred income taxes	(109,067	)	 	2,024		 	(216	)	 	(107,259	)	 	4,102		
Current liabilities assumed	(246,546	)	 	(168,442	)	 	(615	)	 	(415,603	)	 	(39,191	)	
Debt assumed	(550,843	)	 	(4,027	)	 	—		 	(554,870	)	 	(2,365	)	
Other noncurrent liabilities assumed	(22,918	)	 	(50,539	)	 	—		 	(73,457	)	 	(2,651	)	
Other purchase price obligations	—		 	—		 	—		 	—		 	(21,199	)	
Notes issued	—		 	—		 	(465	)	 	(465	)	 	(4,296	)	
Settlement of pre-existing balances	(591	)	 	—		 	(32	)	 	(623	)	 	(1,073	)	
Cash used in acquisitions, net of cash acquired	$	601,416		 	$	661,852		 	$	5,573		 	$	1,268,841		 	$	161,268		

(1) The PGW inventory balance includes the impact of a step-up adjustment of $10.2 million to report the inventory at its fair value.

7

Included in other noncurrent liabilities recorded for our acquisitions of Rhiag and PGW is a liability for certain pension and other post-retirement obligations we assumed with the acquisitions. Due to the immateriality of these plans, we have not provided the detailed disclosures otherwise prescribed by the accounting guidance on pensions and other post-retirement obligations.
The primary objectives of our acquisitions made during the six months ended June 30, 2016 and the year ended December 31, 2015 were to create economic value for our stockholders by enhancing our position as a leading source for alternative collision and mechanical repair products and to expand into other product lines and businesses that may benefit from our operating strengths. Our 2016 acquisition of Rhiag enabled us to expand our market presence in continental Europe. We believe that our Rhiag acquisition will allow for synergies within our European operations, most notably in procurement, and these projected synergies contributed to the goodwill recorded on the Rhiag acquisition. Our April 2016 acquisition of PGW enabled us to enter into new product lines and increase the size of our addressable market. In addition, we believe that our PGW acquisition will allow for distribution synergies with our existing network in North America, which contributed to the goodwill recorded on the acquisition.
When we identify potential acquisitions, we attempt to target companies with a leading market presence, an experienced management team and workforce that provide a fit with our existing operations, and strong cash flows. For certain of our acquisitions, we have identified cost savings and synergies as a result of integrating the company with our existing business that provide additional value to the combined entity. In many cases, acquiring companies with these characteristics will result in purchase prices that include a significant amount of goodwill.

8

The following pro forma summary presents the effect of the businesses acquired during the six months ended June 30, 2016 as though the businesses had been acquired as of January 1, 2015 and the businesses acquired during the year ended December 31, 2015 as though they had been acquired as of January 1, 2014 . The pro forma adjustments are based upon unaudited financial information of the acquired entities (in thousands, except per share data):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Revenue, as reported	$	2,450,693		 	$	1,838,070		 	$	4,372,169		 	$	3,611,982		
Revenue of purchased businesses for the period prior to acquisition:	 	 	 	 	 	 	 	
Rhiag	—		 	246,583		 	213,376		 	481,885		
PGW	61,667		 	279,729		 	328,000		 	537,385		
Other acquisitions	347		 	92,376		 	1,531		 	187,786		
Pro forma revenue	$	2,512,707		 	$	2,456,758		 	$	4,915,076		 	$	4,819,038		
 	 	 	 	 	 	 	 	
Net income, as reported	$	140,737		 	$	119,722		 	$	248,469		 	$	226,817		
Net income of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:	 	 	 	 	 	 	 	
Rhiag	—		 	5,069		 	(178	)	 	5,201		
PGW	6,357		 	8,880		 	13,860		 	2,992		
Other acquisitions	16		 	3,374		 	73		 	6,655		
Acquisition related costs of acquisitions closed in the period, net of tax
 	1,604		 	—		 	10,101		 	—		
Pro forma net income	$	148,714		 	$	137,045		 	$	272,325		 	$	241,665		
 	 	 	 	 	 	 	 	
Earnings per share, basic—as reported	$	0.46		 	$	0.39		 	$	0.81		 	$	0.75		
Effect of purchased businesses for the period prior to acquisition:	 	 	 	 	 	 	 	
Rhiag	—		 	0.02		 	(0.00)		 	0.02		
PGW	0.02		 	0.03		 	0.05		 	0.01		
Other acquisitions	0.00		 	0.01		 	0.00		 	0.02		
Acquisition related costs of acquisitions closed in the period, net of tax
 	0.01		 	—		 	0.03		 	—		
Pro forma earnings per share, basic (1)  	$	0.48		 	$	0.45		 	$	0.89		 	$	0.79		
 	 	 	 	 	 	 	 	
Earnings per share, diluted—as reported	$	0.46		 	$	0.39		 	$	0.81		 	$	0.74		
Effect of purchased businesses for the period prior to acquisition:	 	 	 	 	 	 	 	
Rhiag	—		 	0.02		 	(0.00)		 	0.02		
PGW	0.02		 	0.03		 	0.04		 	0.01		
Other acquisitions	0.00		 	0.01		 	0.00		 	0.02		
Acquisition related costs of acquisitions closed in the period, net of tax
 	0.01		 	—		 	0.03		 	—		
Pro forma earnings per share, diluted (1)  	$	0.48		 	$	0.45		 	$	0.88		 	$	0.79		

(1) The sum of the individual earnings per share amounts may not equal the total due to rounding.
Unaudited pro forma supplemental information is based upon accounting estimates and judgments that we believe are reasonable. The unaudited pro forma supplemental information includes the effect of purchase accounting adjustments, such as the adjustment of inventory acquired to fair value; adjustments to depreciation on acquired property, plant and equipment; adjustments to rent expense for above or below market leases; adjustments to amortization on acquired intangible assets; adjustments to interest expense; and the related tax effects. The pro forma impact of our acquisitions reflects the elimination of acquisition related expenses net of tax totaling $1.6 million and $10.1 million for the three and six months ended June 30, 2016 , respectively. Refer to Note 4, "Restructuring and Acquisition Related Expenses ," for further information regarding our acquisition related expenses. These pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been in effect for the periods presented or of future results.

9

		
Note 3.	Financial Statement Information	
Revenue Recognition
The majority of our revenue is derived from the sale of vehicle parts. Revenue is recognized when the products are shipped to, delivered to or picked up by customers and title has transferred, subject to an allowance for estimated returns, discounts and allowances that we estimate based upon historical information. We recorded a reserve for estimated returns, discounts and allowances of approximately $36.3 million and $32.8 million at June 30, 2016 and December 31, 2015 , respectively. We present taxes assessed by governmental authorities collected from customers on a net basis. Therefore, the taxes are excluded from revenue on our Unaudited Condensed Consolidated Statements of Income and are shown as a current liability on our Unaudited Condensed Consolidated Balance Sheets until remitted. We recognize revenue from the sale of scrap metal, other metals, and cores when title has transferred, which typically occurs upon delivery to the customer.
Allowance for Doubtful Accounts
We have a reserve for uncollectible accounts which was approximately $50.6 million and $24.6 million at June 30, 2016 and December 31, 2015 , respectively. Our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW contributed $23.0 million and $4.8 million , respectively, to our reserve for uncollectible accounts. See  Note 2, "Business Combinations " for further information on our acquisitions.
Inventories, net
Inventories, net consists of the following (in thousands):

								
 	June 30,	 	December 31,	
 	2016	 	2015	
Aftermarket and refurbished products	$	1,422,701		 	$	1,146,162		
Salvage and remanufactured products	397,522		 	410,390		
Glass manufacturing products (1)	70,313		 	—		
Total inventories, net	$	1,890,536		 	$	1,556,552		

(1) Includes all inventory types related to PGW's manufacturing and fabrication of original equipment manufacturer ("OEM") automotive glass parts. Aftermarket automotive glass products distributed by PGW are included within aftermarket and refurbished products above. The balance of glass manufacturing products as of June 30, 2016 is composed of $15.3 million of raw materials, $22.3 million of work in process, and $32.7 million of finished goods. Our U.S. glass manufacturing products inventory is stated at the lower of cost, using the first-in first-out method, or market.
Our acquisitions completed during 2016, including our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW, and adjustments to preliminary valuations of inventory for certain of our 2015 acquisitions as of the acquisition date contributed $331.5 million to our aftermarket and refurbished products inventory, $0.7 million to our salvage and remanufactured products inventory, and $77.8 million to our glass manufacturing products inventory. See  Note 2, "Business Combinations " for further information on our acquisitions.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements that extend the useful life of the related asset are capitalized. As property, plant and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and any resulting gain or loss thereon is recognized. Construction in progress consists primarily of building and land improvements at our existing facilities. Depreciation is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term of the related lease and reasonably assured renewal periods, if shorter.

10

Our estimated useful lives are as follows:

		
Land improvements	10-20 years	
Buildings and improvements	20-40 years	
Machinery and equipment	3-20 years	
Computer equipment and software	3-10 years	
Vehicles and trailers	3-10 years	
Furniture and fixtures	5-7 years	
Property, plant and equipment consists of the following (in thousands):

								
 	June 30,	 	December 31,	
 	2016	 	2015	
Land and improvements	$	135,171		 	$	118,420		
Buildings and improvements	253,389		 	183,480		
Machinery and equipment	574,195		 	355,313		
Computer equipment and software	137,197		 	130,363		
Vehicles and trailers	117,831		 	101,201		
Furniture and fixtures	29,203		 	24,332		
Leasehold improvements	150,086		 	140,732		
 	1,397,072		 	1,053,841		
Less—Accumulated depreciation	(485,592	)	 	(437,946	)	
Construction in progress	143,566		 	80,672		
Total property, plant and equipment, net	$	1,055,046		 	$	696,567		

We record depreciation expense within Depreciation and Amortization on the Unaudited Condensed Consolidated Statements of Income. Additionally, included in Cost of Goods Sold on the Unaudited Condensed Consolidated Statements of Income is depreciation expense associated with our refurbishing, remanufacturing, and furnace operations, our distribution centers, and our glass manufacturing operations. Total depreciation expense during the six months ended June 30, 2016 and 2015 was $57.7 million and $45.2 million , respectively.
Intangible Assets
Intangible assets consist primarily of goodwill (the cost of purchased businesses in excess of the fair value of the identifiable net assets acquired) and other specifically identifiable intangible assets, such as trade names, trademarks, customer and supplier relationships, software and other technology related assets, and covenants not to compete.
The changes in the carrying amount of goodwill by reportable segment during the six months ended June 30, 2016 are as follows (in thousands):

																				
 	North America	 	Europe	 	Specialty	 	Glass	 	Total	
Balance as of January 1, 2016	$	1,445,850		 	$	594,482		 	$	278,914		 	$	—		 	$	2,319,246		
Business acquisitions and adjustments to previously recorded goodwill	715		 	589,952		 	(448	)	 	183,970		 	774,189		
Exchange rate effects	6,729		 	(40,292	)	 	(384	)	 	—		 	(33,947	)	
Balance as of June 30, 2016	$	1,453,294		 	$	1,144,142		 	$	278,082		 	$	183,970		 	$	3,059,488		
During the six months ended June 30, 2016 , we recorded $585.1 million of goodwill related to our acquisition of Rhiag and $184.0 million related to our acquisition of PGW. See Note 2, "Business Combinations " for further information on our acquisitions.

11

The components of other intangibles are as follows (in thousands):

																								
 	June 30, 2016	 	December 31, 2015	
 	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Net	 	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Net	
Trade names and trademarks	$	295,384		 	$	(49,152	)	 	$	246,232		 	$	172,219		 	$	(43,458	)	 	$	128,761		
Customer and supplier relationships	405,547		 	(60,752	)	 	344,795		 	95,508		 	(41,007	)	 	54,501		
Software and other technology related assets	57,253		 	(23,219	)	 	34,034		 	44,500		 	(17,844	)	 	26,656		
Covenants not to compete	11,719		 	(6,420	)	 	5,299		 	10,774		 	(5,575	)	 	5,199		
 	$	769,903		 	$	(139,543	)	 	$	630,360		 	$	323,001		 	$	(107,884	)	 	$	215,117		
The components of other intangibles acquired during the six months ended June 30, 2016 , are as follows (in thousands):    

								
 	Gross Amount	
 	Rhiag	 	PGW	
Trade names and trademarks	$	124,074		 	$	4,200		
Customer and supplier relationships	290,766		 	24,500		
Software and other technology related assets	9,914		 	1,026		
Covenants not to compete	—		 	1,400		
 	$	424,754		 	$	31,126		
Our estimated useful lives for our finite lived intangible assets are as follows:

				
 	Method of Amortization	 	Useful Life	
Trade names and trademarks	Straight-line	 	4-30 years	
Customer and supplier relationships	Accelerated	 	4-20 years	
Software and other technology related assets	Straight-line	 	3-6 years	
Covenants not to compete	Straight-line	 	1-5 years	
Amortization expense for intangible assets was $33.2 million and $16.5 million during the six months ended June 30, 2016 and 2015 , respectively. Estimated amortization expense for each of the five years in the period ending December 31, 2020 is $75.0 million , $85.9 million , $71.5 million , $58.7 million and $46.8 million , respectively.
Warranty Reserve
Some of our salvage mechanical products are sold with a standard six month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products. We record the estimated warranty costs at the time of sale using historical warranty claim information to project future warranty claims activity. The changes in the warranty reserve are as follows (in thousands):

				
Balance as of January 1, 2016	$	17,363		
Warranty expense	16,341		
Warranty claims	(14,256	)	
Balance as of June 30, 2016	$	19,448		
Investments in Unconsolidated Subsidiaries
In February 2016, we sold our investment in ACM Parts Pty Ltd. As part of the PGW acquisition, we obtained ownership interests in three joint ventures, including glass manufacturing operations in China and Mexico. Our investment in unconsolidated subsidiaries and our equity in the net earnings of the investees was not material as of and for the three and six months ended June 30, 2016.

12

Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"), which was amended in July 2015. This update outlines a new comprehensive revenue recognition model that supersedes most current revenue recognition guidance, and requires companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities adopting the standard have the option of using either a full retrospective or modified retrospective approach in the application of this guidance. ASU 2014-09 will be effective for the Company during the first quarter of our fiscal year 2018. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. We are still evaluating the impact that ASU 2014-09 will have on our consolidated financial statements and related disclosures.
In September 2015, the FASB issued Accounting Standards Update 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" ("ASU 2015-16"), which requires an acquirer to recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are identified as opposed to recognition as if the accounting had been completed as of the acquisition date. The ASU also requires disclosure regarding amounts that would have been recorded in previous reporting periods if the adjustment had been recognized as of the acquisition date. ASU 2015-16 became effective for the Company during the first quarter of our fiscal year 2016 and is being applied on a prospective basis. The measurement-period adjustments for our acquisitions and the related impact on earnings of any amounts that would have been recorded in previous periods are disclosed in Note 2, "Business Combinations ."
In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases" ("ASU 2016-02"), t o increase transparency and comparability by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard requires that entities apply the effects of these changes using a modified retrospective approach, which includes a number of optional practical expedients. We are still evaluating the impact that ASU 2016-02 will have on our consolidated financial statements and related disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" (“ASU 2016-09”), to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows, the treatment of forfeitures, and calculation of earnings per share. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016; early adoption is permitted. In prior periods, we have generated excess tax benefits that under the new standard would reduce our effective tax rate. However, the future impact of adopting ASU 2016-09 will depend on a number of factors, including the timing of stock option exercises and the stock prices at the exercise and vesting dates.

Note 4.	Restructuring and Acquisition Related Expenses	
Acquisition Related Expenses
Acquisition related expenses, which include external costs such as legal, accounting, and advisory fees, totaled $3.0 million and $15.7 million for the three and six months ended June 30, 2016 . Of our 2016 expenses, $11.0 million was related to our acquisition of Rhiag, $3.9 million related to our acquisition of PGW, and $0.8 million was related to other completed and potential acquisitions. Acquisition related expenses incurred during the three and six months ended June 30, 2015 totaled $0.7 million and $1.3 million . The expenses incurred in the first half of 2015 were primarily related to our acquisitions of seven aftermarket distribution businesses in the Netherlands.
Acquisition Integration Plans
During the three and six months ended June 30, 2016 , we incurred $6.1 million and $8.2 million of restructuring expenses, respectively. Expenses incurred during the three and six months ended June 30, 2016 were primarily a result of the integration of our acquisition of Parts Channel into our existing North America wholesale business, the integration of our Coast acquisition into our existing Specialty business, and the integration of our Keystone Specialty acquisition into our existing North America wholesale business. Expenses incurred were primarily related to facility closure and relocation costs for duplicate facilities, the merger of existing facilities into larger distribution centers, and the termination of employees.
During the three and six months ended June 30, 2015 , we incurred $0.9 million and $6.9 million of restructuring expenses, respectively. These expenses were primarily a result of the integration of our October 2014 acquisition of Stag

13

Parkway Holding Company, a supplier of parts for recreational vehicles, into our Specialty business. Expenses incurred were primarily related to facility closure and relocation costs for duplicate facilities, and the termination of employees in connection with the consolidation of overlapping facilities with our existing business.
We expect to incur expenses related to the integration of certain of our other acquisitions into our existing operations throughout 2016. These integration activities are expected to include the closure of duplicate facilities, rationalization of personnel in connection with the consolidation of overlapping facilities with our existing business and moving expenses. Future expenses to complete these integration plans are expected to be approximately $6.0 million ; this amount excludes any potential future restructuring expense related to our acquisitions of Rhiag and PGW.

Note 5.	Stock-Based Compensation	
In order to attract and retain employees, non-employee directors, consultants, and other persons associated with us, we may grant qualified and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and performance units under the LKQ Corporation 1998 Equity Incentive Plan (the “Equity Incentive Plan”). We have granted RSUs, stock options, and restricted stock under the Equity Incentive Plan. We expect to issue new shares of common stock to cover past and future equity grants.
RSUs
RSUs vest over periods of up to five years, subject to a continued service condition. Currently outstanding RSUs contain either a time-based vesting condition or a combination of a performance-based vesting condition and a time-based vesting condition, in which case, both conditions must be met before any RSUs vest. For the RSUs containing a performance-based vesting condition, the Company must report positive diluted earnings per share, subject to certain adjustments, during any fiscal year period within  five  years following the grant date. Each RSU converts into one share of LKQ common stock on the applicable vesting date. The grant date fair value of RSUs is based on the market price of LKQ stock on the grant date.
During the six months ended June 30, 2016 , we granted  976,318 RSUs to employees. The fair value of RSUs that vested during the six months ended June 30, 2016 was $16.1 million .
The following table summarizes activity related to our RSUs under the Equity Incentive Plan for the six months ended June 30, 2016 :

											
 	Number
Outstanding	 	Weighted
Average
Grant Date
Fair Value	 	Aggregate Intrinsic Value
   (in thousands) (1)	
Unvested as of January 1, 2016	1,981,292		 	$	24.19		 	$	58,706		
Granted	976,318		 	$	29.05		 	 	
Vested	(605,151	)	 	$	21.20		 	 	
Forfeited / Canceled	(53,449	)	 	$	27.34		 	 	
Unvested as of June 30, 2016	2,299,010		 	$	26.96		 	$	72,879		
Expected to vest after June 30, 2016	2,198,889		 	$	26.98		 	$	69,705		
(1) The aggregate intrinsic value of unvested and expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock.
Stock Options
Stock options vest over periods of up to five years, subject to a continued service condition. Stock options expire either six or ten  years from the date they are granted. No options were granted during the six months ended June 30, 2016 .

14

The following table summarizes activity related to our stock options under the Equity Incentive Plan for the six months ended June 30, 2016 :

													
 	Number
Outstanding	 	Weighted
Average Exercise Price	 	Weighted Average Remaining Contractual Term
(in years)	 	Aggregate Intrinsic Value
   (in thousands) (1)	
Balance as of January 1, 2016	3,765,952		 	$	8.63		 	2.9	 	$	79,317		
Exercised	(692,610	)	 	$	7.06		 	 	 	 	
Forfeited / Canceled	(9,364	)	 	$	31.83		 	 	 	 	
Balance as of June 30, 2016	3,063,978		 	$	8.92		 	2.6	 	$	69,851		
Exercisable as of June 30, 2016	2,981,006		 	$	8.27		 	2.6	 	$	69,851		
Exercisable as of June 30, 2016 and expected to vest thereafter	3,055,681		 	$	8.86		 	2.6	 	$	69,851		
(1) The aggregate intrinsic value of outstanding, exercisable and expected to vest options represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of January 1, 2016 and June 30, 2016, respectively. This amount changes based on the market price of the Company’s common stock.
The following table summarizes the components of pre-tax stock-based compensation expense (in thousands):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
RSUs	$	5,480		 	$	5,528		 	$	11,359		 	$	10,948		
Stock options	29		 	40		 	66		 	166		
Total stock-based compensation expense	$	5,509		 	$	5,568		 	$	11,425		 	$	11,114		
As of June 30, 2016 , unrecognized compensation expense related to unvested RSUs and stock options is $44.8 million and $0.1 million , respectively, and is expected to be recognized over weighted-average periods of 3.3 years and 0.5 years, respectively. Stock-based compensation expense related to these awards will be different to the extent the actual forfeiture rates are different from our estimated forfeiture rates.

Note 6.	Earnings Per Share	
The following chart sets forth the computation of earnings per share (in thousands, except per share amounts):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Net Income	$	140,737		 	$	119,722		 	$	248,469		 	$	226,817		
Denominator for basic earnings per share—Weighted-average shares outstanding	306,718		 	304,286		 	306,437		 	304,145		
Effect of dilutive securities:	 	 	 	 	 	 	 	
RSUs	646		 	732		 	584		 	700		
Stock options	1,534		 	2,229		 	1,613		 	2,260		
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding	308,898		 	307,247		 	308,634		 	307,105		
Earnings per share, basic	$	0.46		 	$	0.39		 	$	0.81		 	$	0.75		
Earnings per share, diluted	$	0.46		 	$	0.39		 	$	0.81		 	$	0.74		

15

The following table sets forth the number of employee stock-based compensation awards outstanding but not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three and six months ended June 30, 2016 and 2015 (in thousands):

												
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Antidilutive securities:	 	 	 	 	 	 	 	
RSUs	—		 	310		 	112		 	323		
Stock options	—		 	98		 	44		 	99		

Note 7.	Accumulated Other Comprehensive Income (Loss)	
The components of Accumulated Other Comprehensive Income (Loss) are as follows (in thousands):

																																	
 	 	Three Months Ended	 	Three Months Ended	
 	 	June 30, 2016	 	June 30, 2015	
 	 	Foreign
Currency
Translation	 	Unrealized (Loss) Gain
on Cash Flow Hedges	 	Unrealized (Loss) Gain
on Pension Plans	 	Accumulated
Other
Comprehensive
(Loss) Income	 	Foreign
Currency
Translation	 	Unrealized (Loss) Gain
on Cash Flow Hedges	 	Unrealized (Loss) Gain on Pension Plan	 	Accumulated
Other
Comprehensive
(Loss) Income	
Beginning balance	 	$	(96,750	)	 	$	(500	)	 	$	(7,501	)	 	$	(104,751	)	 	$	(81,883	)	 	$	(3,118	)	 	$	(9,623	)	 	$	(94,624	)	
Pretax (loss)
 income	 	(73,257	)	 	(6,528	)	 	—		 	(79,785	)	 	44,510		 	(166	)	 	—		 	44,344		
Income tax effect	 	—		 	2,250		 	—		 	2,250		 	—		 	69		 	—		 	69		
Reclassification of unrealized loss	 	—		 	984		 	160		 	1,144		 	—		 	1,564		 	(27	)	 	1,537		
Reclassification of deferred income taxes	 	—		 	(320	)	 	(40	)	 	(360	)	 	—		 	(549	)	 	6		 	(543	)	
Ending Balance	 	$	(170,007	)	 	$	(4,114	)	 	$	(7,381	)	 	$	(181,502	)	 	$	(37,373	)	 	$	(2,200	)	 	$	(9,644	)	 	$	(49,217	)	

	
																																	
 	 	Six Months Ended	 	Six Months Ended	
 	 	June 30, 2016	 	June 30, 2015	
 	 	Foreign
Currency
Translation	 	Unrealized (Loss) Gain
on Cash Flow Hedges	 	Unrealized (Loss) Gain
on Pension Plans	 	Accumulated
Other
Comprehensive
(Loss) Income	 	Foreign
Currency
Translation	 	Unrealized (Loss) Gain
on Cash Flow Hedges	 	Unrealized (Loss) Gain on Pension Plan	 	Accumulated
Other
Comprehensive
(Loss) Income	
Beginning balance	 	$	(96,890	)	 	$	(932	)	 	$	(7,648	)	 	$	(105,470	)	 	$	(27,073	)	 	$	(3,401	)	 	$	(9,751	)	 	$	(40,225	)	
Pretax (loss)
 income	 	(73,117	)	 	(6,672	)	 	—		 	(79,789	)	 	(10,300	)	 	(1,239	)	 	—		 	(11,539	)	
Income tax effect	 	—		 	2,278		 	—		 	2,278		 	—		 	439		 	—		 	439		
Reclassification of unrealized loss	 	—		 	1,790		 	357		 	2,147		 	—		 	3,085		 	143		 	3,228		
Reclassification of deferred income taxes	 	—		 	(578	)	 	(90	)	 	(668	)	 	—		 	(1,084	)	 	(36	)	 	(1,120	)	
Ending Balance	 	$	(170,007	)	 	$	(4,114	)	 	$	(7,381	)	 	$	(181,502	)	 	$	(37,373	)	 	$	(2,200	)	 	$	(9,644	)	 	$	(49,217	)	
Unrealized losses on our interest rate swap contracts totaling $1.0 million and $1.8 million were reclassified to interest expense in our Unaudited Condensed Consolidated Statements of Income during the three and six months ended June 30, 2016 , respectively. During the three and six months ended June 30, 2015 , unrealized losses of $1.6 million and $3.1 million , respectively, related to our interest rate swaps were reclassified to interest expense. The deferred income taxes related to our cash flow hedges were reclassified from Accumulated Other Comprehensive Income to income tax expense.

16

		
Note 8.	Long-Term Obligations	
Long-Term Obligations consist of the following (in thousands):

								
 	June 30,	 	December 31,	
 	2016	 	2015	
Senior secured credit agreement:	 	 	 	
Term loans payable	$	750,707		 	$	410,625		
Revolving credit facilities	1,292,734		 	480,481		
Senior notes	600,000		 	600,000		
Euro notes	555,400		 	—		
Receivables securitization facility	93,520		 	63,000		
Notes payable through October 2025 at weighted average interest rates of 2.3% and 2.2%, respectively	9,866		 	16,104		
Other long-term debt at weighted average interest rates of 2.3% and 2.4%, respectively	59,457		 	29,485		
Total debt	3,361,684		 	1,599,695		
Less: long-term debt issuance costs	(23,925	)	 	(13,533	)	
Less: current debt issuance cost	(2,298	)	 	(1,460	)	
Total debt, net of issuance costs	3,335,461		 	1,584,702		
Less: current maturities, net of debt issuance costs	(60,832	)	 	(56,034	)	
Long term debt, net of debt issuance costs	$	3,274,629		 	$	1,528,668		
Senior Secured Credit Agreement
On January 29, 2016, LKQ Corporation, LKQ Delaware LLP, and certain other subsidiaries (collectively, the "Borrowers") entered into the Fourth Amended and Restated Credit Agreement ("Credit Agreement"), which amended the Company’s Third Amended and Restated Credit Agreement by modifying certain terms to (1) extend the maturity date by approximately two years to January 29, 2021; (2) increase the total availability under the credit agreement from $2.3 billion to $3.2 billion (composed of $2.45 billion in the revolving credit facility's multicurrency component; and $750 million of term loans, which consist of a term loan of approximately $500 million and a €230 million term loan); (3) increase our ability to incur additional indebtedness; and (4) make other immaterial or clarifying modifications and amendments to the terms of the Third Amended and Restated Credit Agreement. The additional term loan borrowing was used to repay outstanding revolver borrowings and the amount outstanding under our receivables securitization facility, and to pay fees and expenses relating to the amendment and restatement. The remaining additional term loan borrowing was used to fund the Rhiag acquisition.
Amounts under the revolving credit facility are due and payable upon maturity of the Credit Agreement on January 29, 2021. Amounts under the initial and additional term loan borrowings will be due and payable in quarterly installments equal to 0.625% of the original principal amount on each of June 30, September 30, and December 31, 2016, and quarterly installments thereafter equal to 1.25% of the original principal amount beginning on March 31, 2017, with the remaining balance due and payable on the maturity date of the Credit Agreement.
We are required to prepay the term loan by amounts equal to proceeds from the sale or disposition of certain assets if the proceeds are not reinvested within twelve months. We also have the option to prepay outstanding amounts under the Credit Agreement without penalty.
The Credit Agreement contains customary representations and warranties, and contains customary covenants that provide limitations and conditions on our ability to enter into certain transactions. The Credit Agreement also contains financial and affirmative covenants, including limitations on our net leverage ratio and a minimum interest coverage ratio.
Borrowings under the Credit Agreement bear interest at variable rates, which depend on the currency and duration of the borrowing elected, plus an applicable margin. The applicable margin is subject to change in increments of 0.25% depending on our net leverage ratio. Interest payments are due on the last day of the selected interest period or quarterly in arrears depending on the type of borrowing. Including the effect of the interest rate swap agreements described in Note 9, "Derivative Instruments and Hedging Activities ," the weighted average interest rates on borrowings outstanding under the Credit Agreement at June 30, 2016 and December 31, 2015 were 2.4% and 1.8% , respectively. We also pay a commitment fee based on the average daily unused amount of the revolving credit facilities. The commitment fee is subject to change in increments of 0.05% depending on our net leverage ratio. In addition, we pay a participation commission on outstanding letters of credit at an

17

applicable rate based on our net leverage ratio, as well as a fronting fee of 0.125% to the issuing bank, which are due quarterly in arrears.
Of the total borrowings outstanding under the Credit Agreement, $28.3 million and $22.5 million were classified as current maturities at June 30, 2016 and December 31, 2015 , respectively. As of June 30, 2016 , there were letters of credit outstanding in the aggregate amount of $71.9 million . The amounts available under the revolving credit facilities are reduced by the amounts outstanding under letters of credit, and thus availability under the revolving credit facilities at June 30, 2016 was $1.1 billion .
Related to the execution of the Credit Agreement in January 2016, we incurred $6.1 million of fees, of which $5.0 million were capitalized as an offset to Long-Term Obligations and are amortized over the term of the agreement. The remaining $1.1 million of fees, together with $1.8 million of capitalized debt issuance costs related to our Third Amended and Restated Credit Agreement, were expensed during the six months ended June 30, 2016 as a loss on debt extinguishment.
Senior Notes
In April 2014, LKQ Corporation completed an offer to exchange $600 million aggregate principal amount of registered 4.75% Senior Notes due 2023 (the "Notes") for notes previously issued through a private placement. The Notes are governed by the Indenture dated as of May 9, 2013 among LKQ Corporation, certain of our subsidiaries (the "Guarantors") and U.S. Bank National Association, as trustee. The Notes are substantially identical to those previously issued through the private placement, except the Notes are registered under the Securities Act of 1933.
The Notes bear interest at a rate of 4.75% per year from the most recent payment date on which interest has been paid or provided for. Interest on the Notes is payable in arrears on May 15 and November 15 of each year. The first interest payment was made on November 15, 2013. The Notes are fully and unconditionally guaranteed, jointly and severally, by the Guarantors.
The Notes and the guarantees are, respectively, LKQ Corporation's and each Guarantor's senior unsecured obligations and are subordinated to all of LKQ Corporation's and the Guarantors' existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Notes to the extent of the assets of those subsidiaries.
Repayment of Rhiag Acquired Debt and Debt Related Liabilities
On March 24, 2016, LKQ Netherlands B.V., a wholly-owned subsidiary of ours, borrowed €508 million under our multi-currency revolving credit facility to repay the Rhiag acquired debt and debt related liabilities. The borrowed funds were passed through an intercompany note to Rhiag and then were used to pay (i) $519.6 million ( €465.0 million ) for the principal of Rhiag senior note debt assumed with the acquisition, (ii) accrued interest of $8.0 million ( €7.1 million ) on the notes, (iii) the call premium of $23.8 million ( €21.2 million ) associated with early redemption of the notes and (iv) $4.9 million ( €4.4 million ) to terminate Rhiag’s outstanding interest rate swap related to the floating portion of the notes. The call premium is recorded as a loss on debt extinguishment in the Unaudited Condensed Consolidated Statements of Income.
Euro Notes
On April 14, 2016, LKQ Italia Bondco S.p.A. (the “Issuer”), an indirect, wholly-owned subsidiary of LKQ Corporation, completed an offering of €500 million aggregate principal amount of senior notes due April 1, 2024 (the “Euro Notes”) in a private placement conducted pursuant to Regulation S and Rule 144A under the Securities Act of 1933. The proceeds from the offering were used to repay a portion of the revolver borrowings under the Credit Agreement and to pay related fees and expenses. The Euro Notes are governed by the Indenture dated as of April 14, 2016 (the “Indenture”) among the Issuer, LKQ Corporation and certain of our subsidiaries (the “Euro Notes Subsidiaries”), the trustee, and the paying agent, transfer agent, and registrar.
The Euro Notes bear interest at a rate of 3.875% per year from the date of original issuance or from the most recent payment date on which interest has been paid or provided for. Interest on the Euro Notes is payable in arrears on April 1 and October 1 of each year, beginning on October 1, 2016. The Euro Notes are fully and unconditionally guaranteed by LKQ Corporation and the Euro Notes Subsidiaries (the "Euro Notes Guarantors").
The Euro Notes and the guarantees are, respectively, the Issuer’s and each Euro Notes Guarantor’s senior unsecured obligations and are subordinated to all of the Issuer's and the Euro Notes Guarantors’ existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Euro Notes are effectively subordinated to all of the liabilities of our subsidiaries that are not guaranteeing the Euro Notes to the extent of the assets of those subsidiaries. The Euro Notes have been listed on the ExtraMOT, Professional Segment of the Borsa Italia S.p.A. securities exchange as well as the Global Exchange Market of the Irish Stock Exchange.

18

Related to the execution of the Euro Notes in April 2016, we incurred $10.1 million of fees which were capitalized as an offset to Long-Term Obligations and are amortized over the term of the offering.
Receivables Securitization Facility
On September 29, 2014, we amended the terms of the receivables securitization facility with The Bank of Tokyo-Mitsubishi UFJ, LTD. ("BTMU") to: (i) extend the term of the facility to October 2, 2017; (ii) increase the maximum amount available to $97 million ; and (iii) make other clarifying and updating changes. Under the facility, LKQ sells an ownership interest in certain receivables, related collections and security interests to BTMU for the benefit of conduit investors and/or financial institutions for cash proceeds. Upon payment of the receivables by customers, rather than remitting to BTMU the amounts collected, LKQ retains such collections as proceeds for the sale of new receivables generated by certain of the ongoing operations of the Company.
The sale of the ownership interest in the receivables is accounted for as a secured borrowing in our Unaudited Condensed Consolidated Balance Sheets, under which the receivables included in the program collateralize the amounts invested by BTMU, the conduit investors and/or financial institutions (the "Purchasers"). The receivables are held by LKQ Receivables Finance Company, LLC ("LRFC"), a wholly owned bankruptcy-remote special purpose subsidiary of LKQ, and therefore, the receivables are available first to satisfy the creditors of LRFC, including the investors. As of June 30, 2016 and December 31, 2015 , $135.2 million and $136.1 million , respectively, of net receivables were collateral for the investment under the receivables facility.
Under the receivables facility, we pay variable interest rates plus a margin on the outstanding amounts invested by the Purchasers. The variable rates are based on (i) commercial paper rates, (ii) the London InterBank Offered Rate ("LIBOR"), or (iii) base rates, and are payable monthly in arrears. Commercial paper rates will be the applicable variable rate unless conduit investors are not available to invest in the receivables at commercial paper rates. In such case, financial institutions will invest at the LIBOR rate or at base rates. We also pay a commitment fee on the excess of the investment maximum over the average daily outstanding investment, payable monthly in arrears. As of June 30, 2016 , the interest rate under the receivables facility was based on commercial paper rates and was 1.3% . The outstanding balances of $93.5 million and $63.0 million as of June 30, 2016 and December 31, 2015 , respectively, were classified as long-term on the Unaudited Condensed Consolidated Balance Sheets because we have the ability and intent to refinance these borrowings on a long-term basis.

Note 9.	Derivative Instruments and Hedging Activities	
We are exposed to market risks, including the effect of changes in interest rates, foreign currency exchange rates and commodity prices. Under our current policies, we use derivatives to manage our exposure to variable interest rates on our senior secured debt and changing foreign exchange rates for certain foreign currency denominated transactions. We do not hold or issue derivatives for trading purposes.
Cash Flow Hedges
At June 30, 2016 , we had interest rate swap agreements in place to hedge a portion of the variable interest rate risk on our variable rate borrowings under our Credit Agreement, with the objective of reducing the impact of interest rate fluctuations and stabilizing cash flows. Under the terms of the interest rate swap agreements, we pay the fixed interest rate and receive payment at a variable rate of interest based on LIBOR for the respective currency of each interest rate swap agreement’s notional amount. The effective portion of changes in the fair value of the interest rate swap agreements is recorded in Accumulated Other Comprehensive Income (Loss) and is reclassified to interest expense when the underlying interest payment has an impact on earnings. The ineffective portion of changes in the fair value of the interest rate swap agreements is reported in interest expense. Our interest rate swap contracts have maturity dates ranging from 2016 through 2021.
In the first quarter of 2016, we entered into interest rate swap contracts representing a total of $440 million of U.S. dollar-denominated debt. In the second quarter of 2016, we entered into interest rate swap contracts representing a total of $150 million of U.S. dollar-denominated debt. The new swaps entered into in 2016 have maturity dates ranging from January to June 2021, and convert floating to fixed interest rates.
From time to time, we may hold foreign currency forward contracts related to certain foreign currency denominated intercompany transactions, with the objective of reducing the impact of changing exchange rates on these future cash flows, as well as reducing the impact of fluctuating exchange rates on our results of operations through the respective dates of settlement. Under the terms of the foreign currency forward contracts, we will sell the foreign currency in exchange for U.S. dollars at a fixed rate on the maturity dates of the contracts. The effective portion of the changes in fair value of the foreign currency forward contracts is recorded in Accumulated Other Comprehensive Income (Loss) and reclassified to other income (expense) when the underlying transaction has an impact on earnings.

19

The following table summarizes the notional amounts and fair values of our interest rate swaps that are designated cash flow hedges as of June 30, 2016 and December 31, 2015 (in thousands):

																					
 	 	Notional Amount	 	Fair Value at June 30, 2016 (USD)	 	Fair Value at December 31, 2015 (USD)	
 	 	June 30, 2016	 	December 31, 2015	 	Other Accrued Expenses	 	Other Noncurrent Liabilities	 	Other Accrued Expenses	
Interest rate swap agreements	 	 	 	 	 	 	
USD denominated	 	$	760,000		 	$	170,000		 	$	500		 	$	5,715		 	$	858		
GBP denominated	 	£	50,000		 	£	50,000		 	209		 	—		 	465		
CAD denominated	 	C$	—		 	C$	25,000		 	—		 	—		 	24		
Total cash flow hedges	 	$	709		 	$	5,715		 	$	1,347		
 
While our derivative instruments executed with the same counterparty are subject to master netting arrangements, we present our cash flow hedge derivative instruments on a gross basis in our Unaudited Condensed Consolidated Balance Sheets. The impact of netting the fair values of these contracts would not have a material effect on our Unaudited Condensed Consolidated Balance Sheets at June 30, 2016 or December 31, 2015 .
The activity related to our cash flow hedges is included in Note 7, "Accumulated Other Comprehensive Income (Loss) ." Ineffectiveness related to our cash flow hedges was immaterial to our results of operations during the three and six months ended June 30, 2016 and June 30, 2015 . We do not expect future ineffectiveness related to our cash flow hedges to have a material effect on our results of operations.
As of June 30, 2016 , we estimate that $2.4 million of derivative losses (net of tax) included in Accumulated Other Comprehensive Loss will be reclassified into our consolidated statements of income within the next 12 months.
Other Derivative Instruments
We hold other short-term derivative instruments, including foreign currency forward contracts, to manage our exposure to variability related to inventory purchases and intercompany financing transactions denominated in a non-functional currency. We have elected not to apply hedge accounting for these transactions, and therefore the contracts are adjusted to fair value through our results of operations as of each balance sheet date, which could result in volatility in our earnings.

Note 10.	Fair Value Measurements	
Financial Assets and Liabilities Measured at Fair Value
We use the market and income approaches to value our financial assets and liabilities, and during the three and six months ended June 30, 2016 , there were no significant changes in valuation techniques or inputs related to the financial assets or liabilities that we have historically recorded at fair value. The tiers in the fair value hierarchy include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

20

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation inputs we utilized to determine such fair value as of June 30, 2016 and December 31, 2015 (in thousands): 

																
 	Balance as of June 30, 2016	 	Fair Value Measurements as of June 30, 2016	
 			Level 1	 	Level 2	 	Level 3	
Assets:	 	 	 	 	 	 	 	
Cash surrender value of life insurance	$	33,574		 	$	—		 	$	33,574		 	$	—		
Total Assets	$	33,574		 	$	—		 	$	33,574		 	$	—		
Liabilities:	 	 	 	 	 	 	 	
Contingent consideration liabilities	$	3,134		 	$	—		 	$	—		 	$	3,134		
Deferred compensation liabilities	34,742		 	—		 	34,742		 	—		
Interest rate swaps	6,424		 	—		 	6,424		 	—		
Total Liabilities	$	44,300		 	$	—		 	$	41,166		 	$	3,134		

	
																
 	Balance as of December 31, 2015	 	Fair Value Measurements as of December 31, 2015	
 			Level 1	 	Level 2	 	Level 3	
Assets:	 	 	 	 	 	 	 	
Cash surrender value of life insurance	$	29,782		 	$	—		 	$	29,782		 	$	—		
Total Assets	$	29,782		 	$	—		 	$	29,782		 	$	—		
Liabilities:	 	 	 	 	 	 	 	
Contingent consideration liabilities	$	4,584		 	$	—		 	$	—		 	$	4,584		
Deferred compensation liabilities	30,336		 	—		 	30,336		 	—		
Interest rate swaps	1,347		 	—		 	1,347		 	—		
Total Liabilities	$	36,267		 	$	—		 	$	31,683		 	$	4,584		
The cash surrender value of life insurance is included in Other Assets on our Unaudited Condensed Consolidated Balance Sheets. The current portion of deferred compensation and contingent consideration liabilities is included in Other Current Liabilities, and the noncurrent portion is included in Other Noncurrent Liabilities on our Unaudited Condensed Consolidated Balance Sheets based on the expected timing of the related payments. The balance sheet classification of the interest rate swaps is presented in Note 9, "Derivative Instruments and Hedging Activities ."
Our Level 2 assets and liabilities are valued using inputs from third parties and market observable data. We obtain valuation data for the cash surrender value of life insurance and deferred compensation liabilities from third party sources, which determine the net asset values for our accounts using quoted market prices, investment allocations and reportable trades. We value our derivative instruments using a third party valuation model that performs a discounted cash flow analysis based on the terms of the contracts and market observable inputs such as current and forward interest rates.
Our contingent consideration liabilities are related to our business acquisitions as further described in Note 2, "Business Combinations ." Under the terms of the contingent consideration agreements, payments may be made at specified future dates depending on the performance of the acquired business subsequent to the acquisition. The liabilities for these payments are classified as Level 3 liabilities because the related fair value measurement, which is determined using an income approach, includes significant inputs not observable in the market. These liabilities are not considered material.
Changes in the fair value of our contingent consideration obligations are as follows (in thousands):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Beginning balance	$	3,079		 	$	5,561		 	$	4,584		 	$	7,295		
Payments	—		 	(538	)	 	(1,667	)	 	(2,205	)	
Increase in fair value included in earnings	46		 	125		 	119		 	276		
Exchange rate effects	9		 	43		 	98		 	(175	)	
Balance as of June 30	$	3,134		 	$	5,191		 	$	3,134		 	$	5,191		

21

All the amounts included in earnings for the three and six months ended  June 30, 2016 were related to contingent consideration obligations outstanding as of June 30, 2016 . Of the amounts included in earnings for the three and six months ended  June 30, 2015 ,  $0.1 million and $0.1 million of losses, respectively, were related to contingent consideration obligations outstanding as of June 30, 2016 . Changes in the values of the liabilities are recorded in Other expense (income), net on our Unaudited Condensed Consolidated Statements of Income.
The changes in the fair value of contingent consideration obligations included in earnings during the respective periods in  2016  and  2015  reflect the quarterly reassessment of each obligation's fair value, including an analysis of the significant inputs used in the valuation, as well as the accretion of the present value discount.
Financial Assets and Liabilities Not Measured at Fair Value
Our debt is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. Based on market conditions as of June 30, 2016 and December 31, 2015 , the fair values of our credit agreement borrowings reasonably approximated the carrying values of $2.0 billion and $891.1 million , respectively. In addition, based on market conditions, the fair value of the outstanding borrowings under the receivables facility reasonably approximated the carrying value of $93.5 million and $63.0 million at June 30, 2016 and December 31, 2015 , respectively. As of June 30, 2016 and December 31, 2015 , the fair value of the Notes was approximately $587.9 million and $567.3 million , respectively, compared to a carrying value of $600 million . As of June 30, 2016 , the fair value of the Euro Notes was approximately $573.1 million compared to a carrying value of $555.4 million .
The fair value measurements of the borrowings under our credit agreement and receivables facility are classified as Level 2 within the fair value hierarchy since they are determined based upon significant inputs observable in the market, including interest rates on recent financing transactions with similar terms and maturities. We estimated the fair value by calculating the upfront cash payment a market participant would require at June 30, 2016 to assume these obligations. The fair value of our Notes is classified as Level 1 within the fair value hierarchy since it is determined based upon observable market inputs including quoted market prices in an active market. The fair value of our Euro Notes is determined based upon observable market inputs including quoted market prices in a market that is not active, and therefore is classified as Level 2 within the fair value hierarchy.

Note 11.	Commitments and Contingencies	
Operating Leases
We are obligated under noncancelable operating leases for corporate office space, warehouse and distribution facilities, trucks and certain equipment.
The future minimum lease commitments under these leases at June 30, 2016 are as follows (in thousands):

				
Six months ending December 31, 2016	$	97,039		
Years ending December 31:	 	
2017	172,688		
2018	142,782		
2019	114,178		
2020	92,563		
2021	70,136		
Thereafter	351,954		
Future Minimum Lease Payments	$	1,041,340		
Litigation and Related Contingencies
We have certain contingencies resulting from litigation, claims and other commitments and are subject to a variety of environmental and pollution control laws and regulations incident to the ordinary course of business. We currently expect that the resolution of such contingencies will not materially affect our financial position, results of operations or cash flows.

Note 12.	Income Taxes	
At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our interim earnings. We also record the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and the effects of changes in tax laws or rates, in the interim period in which they occur.

22

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in state and foreign jurisdictions, permanent and temporary differences between book and taxable income, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes.    
Our effective income tax rate for the six months ended  June 30, 2016  was  34.8% , compared with 35.2% for the comparable prior year period. The lower effective income tax rate for the six months ended June 30, 2016 reflects our expected geographic distribution of income, with a slightly larger proportion of our pre-tax income expected to be earned in the typically lower tax rate international jurisdictions. In addition, the tax provision for the first six months of 2015 included unfavorable discrete items of $0.3 million primarily attributable to U.S. state deferred tax adjustments; discrete items for the six months ended June 30, 2016 were immaterial.
Our acquisitions completed during the first half of 2016, including our March 2016 acquisition of Rhiag and our April 2016 acquisition of PGW, contributed $29.6 million and $136.5 million of deferred tax assets and liabilities, respectively, relating to intangible assets; property, plant and equipment; and reserves, including pension and other post-retirement benefit obligations.

Note 13.	Segment and Geographic Information	
We have five operating segments: Wholesale – North America; Europe; Specialty; Glass; and Self Service. Our Glass operating segment was formed with our April 21, 2016 acquisition of PGW, as discussed in Note 2, "Business Combinations ." Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Our reportable segments are organized based on a combination of geographic areas served and type of product lines offered. The reportable segments are managed separately as each business serves different customers (i.e. geographic in the case of North America and Europe and product type in the case of Specialty and Glass) and is affected by different economic conditions. Therefore, we present four reportable segments: North America, Europe, Specialty and Glass.
The following tables present our financial performance by reportable segment for the periods indicated (in thousands):

																								
 	North America	 	Europe	 	Specialty	 	Glass	 	Eliminations	 	Consolidated	
Three Months Ended June 30, 2016	 	 	 	 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	
Third Party	$	1,080,401		 	$	824,216		 	$	335,972		 	$	210,104		 	$	—		 	$	2,450,693		
Intersegment	119		 	(10	)	 	1,094		 	74		 	(1,277	)	 	—		
Total segment revenue	$	1,080,520		 	$	824,206		 	$	337,066		 	$	210,178		 	$	(1,277	)	 	$	2,450,693		
Segment EBITDA	$	163,825		 	$	89,982		 	$	41,792		 	$	23,301		 	$	—		 	$	318,900		
Depreciation and amortization  (1)	17,622		 	28,280		 	5,283		 	6,531		 	—		 	57,716		
Three Months Ended June 30, 2015	 	 	 	 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	
Third Party	$	1,044,779		 	$	509,833		 	$	283,458		 	$	—		 	$	—		 	$	1,838,070		
Intersegment	372		 	70		 	872		 	—		 	(1,314	)	 	—		
Total segment revenue	$	1,045,151		 	$	509,903		 	$	284,330		 	$	—		 	$	(1,314	)	 	$	1,838,070		
Segment EBITDA	$	138,880		 	$	53,943		 	$	40,198		 	$	—		 	$	—		 	$	233,021		
Depreciation and amortization  (1)	17,249		 	8,704		 	5,092		 	—		 	—		 	31,045		

23

	
																								
 	North America	 	Europe	 	Specialty	 	Glass	 	Eliminations	 	Consolidated	
Six Months Ended June 30, 2016	 	 	 	 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	
Third Party	$	2,167,764		 	$	1,370,967		 	$	623,334		 	$	210,104		 	$	—		 	$	4,372,169		
Intersegment	333		 	—		 	2,045		 	74		 	(2,452	)	 	—		
Total segment revenue	$	2,168,097		 	$	1,370,967		 	$	625,379		 	$	210,178		 	$	(2,452	)	 	$	4,372,169		
Segment EBITDA	$	311,200		 	$	147,480		 	$	73,530		 	$	23,301		 	$	—		 	$	555,511		
Depreciation and amortization  (1)	35,137		 	38,588		 	10,626		 	6,531		 	—		 	90,882		
Six Months Ended June 30, 2015	 	 	 	 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	
Third Party	$	2,090,858		 	$	997,179		 	$	523,945		 	$	—		 	$	—			$	3,611,982		
Intersegment	466		 	70		 	1,607		 	—		 	(2,143	)		—		
Total segment revenue	$	2,091,324		 	$	997,249		 	$	525,552		 	$	—		 	$	(2,143	)		$	3,611,982		
Segment EBITDA	$	288,268		 	$	100,466		 	$	65,602		 	$	—		 	$	—			$	454,336		
Depreciation and amortization  (1)	34,515		 	17,055		 	10,144		 	—		 	—			61,714		
(1)  Amounts presented include depreciation and amortization expense recorded within cost of goods sold.
The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. Segment EBITDA is calculated as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other acquisition related gains and losses (including inventory step-up adjustments related to acquisitions) and equity in earnings of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding depreciation, amortization, interest (including loss on debt extinguishment) and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA.
The table below provides a reconciliation from Segment EBITDA to Net Income (in thousands):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Segment EBITDA	$	318,900		 	$	233,021		 	$	555,511		 	$	454,336		
Deduct:	 	 	 	 	 	 	 	
Restructuring and acquisition related expenses (1)	9,080		 	1,663		 	23,891		 	8,151		
Inventory step-up adjustment - acquisition related (2)	10,213		 	—		 	10,213		 	—		
Change in fair value of contingent consideration liabilities (3)	46		 	125		 	119		 	276		
Add:	 	 	 	 	 	 	 	
Equity in earnings of unconsolidated subsidiaries	147		 	(1,162	)	 	(215	)	 	(3,070	)	
Gains on foreign exchange contracts - acquisition related (4)	—		 	—		 	18,342		 	—		
EBITDA	299,708		 	230,071		 	539,415		 	442,839		
Depreciation and amortization - cost of goods sold	5,187		 	1,263		 	6,665		 	2,479		
Depreciation and amortization	52,529		 	29,782		 	84,217		 	59,235		
Interest expense, net	26,381		 	14,622		 	40,973		 	29,528		
Loss on debt extinguishment	—		 	—		 	26,650		 	—		
Provision for income taxes	74,874		 	64,682		 	132,441		 	124,780		
Net income	$	140,737		 	$	119,722		 	$	248,469		 	$	226,817		

(1)  See  Note 4, "Restructuring and Acquisition Related Expenses ," for further information.

24

(2) Reflects the impact on Cost of Goods Sold of the step-up acquisition adjustment to record PGW inventory at its fair value.
(3)  See  Note 10, "Fair Value Measurements ," for further information on our contingent consideration liabilities.
(4) Reflects gains on foreign currency forwards used to fix the Euro purchase price of Rhiag. See Note 2, "Business Combinations ," for further information.

The following table presents capital expenditures by reportable segment (in thousands):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Capital Expenditures	 	 	 	 	 	 	 	
North America	$	19,448		 	$	14,744		 	$	42,231		 	$	30,147		
Europe	21,444		 	22,303		 	40,551		 	30,172		
Specialty	2,150		 	3,620		 	10,653		 	6,444		
Glass	8,884		 	—		 	8,884		 	—		
 	$	51,926		 	$	40,667		 	$	102,319		 	$	66,763		
The following table presents assets by reportable segment (in thousands):

								
 	June 30,	 	December 31,	
 	2016	 	2015	
Receivables, net	 	 	 	
North America	$	331,359		 	$	314,743		
Europe (1)	444,064		 	215,710		
Specialty	99,871		 	59,707		
Glass (1)	119,859		 	—		
Total receivables, net	995,153		 	590,160		
Inventories, net	 	 	 	
North America	807,132		 	847,787		
Europe (1)	613,928		 	427,323		
Specialty	305,396		 	281,442		
Glass (1)	164,080		 	—		
Total inventories, net	1,890,536		 	1,556,552		
Property, Plant and Equipment, net	 	 	 	
North America	479,907		 	467,961		
Europe (1)	242,741		 	175,455		
Specialty	58,443		 	53,151		
Glass (1)	273,955		 	—		
Total property, plant and equipment, net	1,055,046		 	696,567		
Other unallocated assets	4,245,209		 	2,804,558		
Total assets	$	8,185,944		 	$	5,647,837		
(1)  The increase in assets for our Europe and Glass segments primarily relates to the Rhiag and PGW acquisitions, respectively (see " Note 2, "Business Combinations " for further detail).
We report net receivables, inventories, and net property, plant and equipment by segment as that information is used by the chief operating decision maker in assessing segment performance. These assets provide a measure for the operating capital employed in each segment. Unallocated assets include cash, prepaid and other current and noncurrent assets, goodwill, intangibles and deferred income taxes.

25

The majority of our operations are conducted in the U.S. Our European operations are located in the U.K., the Netherlands, Belgium, France, Sweden, and Norway. As part of the Rhiag and PGW acquisitions we expanded our operations into Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Poland, Spain, and Germany. Our operations in other countries include recycled and aftermarket operations in Canada, engine remanufacturing and bumper refurbishing operations in Mexico, an aftermarket parts freight consolidation warehouse in Taiwan, and administrative support functions in India. Our net sales are attributed to geographic area based on the location of the selling operation.
The following table sets forth our revenue by geographic area (in thousands):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Revenue	 	 	 	 	 	 	 	
United States	$	1,483,840		 	$	1,228,424		 	$	2,768,807		 	$	2,423,369		
United Kingdom	358,266		 	347,064		 	707,942		 	690,671		
Other countries	608,587		 	262,582		 	895,420		 	497,942		
 	$	2,450,693		 	$	1,838,070		 	$	4,372,169		 	$	3,611,982		

The following table sets forth our tangible long-lived assets by geographic area (in thousands):

								
 	June 30,	 	December 31,	
 	2016	 	2015	
Long-lived Assets	 	 	 	
United States	$	749,504		 	$	493,300		
United Kingdom	147,556		 	138,546		
Other countries	157,986		 	64,721		
 	$	1,055,046		 	$	696,567		

The following table sets forth our revenue by product category (in thousands):

																
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Aftermarket, other new and refurbished products	$	1,756,334		 	$	1,296,168		 	$	3,144,070		 	$	2,542,639		
Recycled, remanufactured and related products and services	435,023		 	408,180		 	865,612		 	806,625		
Manufactured products (1)	140,632		 	—		 	140,632		 	—		
Other	118,704		 	133,722		 	221,855		 	262,718		
 	$	2,450,693		 	$	1,838,070		 	$	4,372,169		 	$	3,611,982		
    
(1) Includes sales of PGW's manufactured and fabricated OEM automotive glass products. Sales of PGW's aftermarket automotive glass products are included within Aftermarket, other new and refurbished products above.
Our North American reportable segment generates revenue from all of our product categories, except manufactured products, while our European and Specialty segments generate revenue primarily from the sale of aftermarket products. Our Glass segment generates revenue from both the sale of aftermarket products and the sale of manufactured products. Revenue from other sources includes scrap sales, bulk sales to mechanical remanufacturers (including cores) and sales of aluminum ingots and sows from our furnace operations.

Note 14.	Condensed Consolidating Financial Information	
LKQ Corporation (the "Parent") issued, and the Guarantors have fully and unconditionally guaranteed, jointly and severally, the Notes due on May 15, 2023. A Guarantor's guarantee will be unconditionally and automatically released and discharged upon the occurrence of any of the following events: (i) a transfer (including as a result of consolidation or merger) by the Guarantor to any person that is not a Guarantor of all or substantially all assets and properties of such Guarantor,

26

provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the Notes; (ii) a transfer (including as a result of consolidation or merger) to any person that is not a Guarantor of the equity interests of a Guarantor or issuance by a Guarantor of its equity interests such that the Guarantor ceases to be a subsidiary, as defined in the Indenture, provided the Guarantor is also released from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the Notes; (iii) the release of the Guarantor from its obligations with respect to indebtedness under the Credit Agreement or other indebtedness of ours, which obligation gave rise to the guarantee of the Notes; and (iv) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture, as defined in the Indenture.
Presented below are the unaudited condensed consolidating financial statements of the Parent, the Guarantors, the non-guarantor subsidiaries (the "Non-Guarantors"), and the elimination entries necessary to present the Company's financial statements on a consolidated basis as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934 resulting from the guarantees of the Notes. Investments in consolidated subsidiaries have been presented under the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries, intercompany balances, and intercompany revenue and expenses. The unaudited condensed consolidating financial statements below have been prepared from the Company's financial information on the same basis of accounting as the unaudited condensed consolidated financial statements, and may not necessarily be indicative of the financial position, results of operations or cash flows had the Parent, Guarantors and Non-Guarantors operated as independent entities.

27

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)	
																				
 	June 30, 2016	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Assets	 	 	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	 	 	
Cash and equivalents	$	52,144		 	$	31,140		 	$	189,919		 	$	—		 	$	273,203		
Receivables, net	—		 	372,413		 	622,740		 	—		 	995,153		
Intercompany receivables, net	14,864		 	11,224		 	—		 	(26,088	)	 	—		
Inventories, net	—		 	1,203,556		 	686,980		 	—		 	1,890,536		
Prepaid expenses and other current assets	2,083		 	53,520		 	83,933		 	—		 	139,536		
Total Current Assets	69,091		 	1,671,853		 	1,583,572		 	(26,088	)	 	3,298,428		
Property, Plant and Equipment, net	271		 	743,265		 	311,510		 	—		 	1,055,046		
Intangible Assets:	 	 	 	 	 	 	 	 	 	
Goodwill	—		 	1,825,033		 	1,234,455		 	—		 	3,059,488		
Other intangibles, net	—		 	161,257		 	469,103		 	—		 	630,360		
Investment in Subsidiaries	5,038,195		 	278,799		 	—		 	(5,316,994	)	 	—		
Intercompany Notes Receivable	1,130,732		 	780,340		 	—		 	(1,911,072	)	 	—		
Other Assets	41,418		 	80,687		 	28,361		 	(7,844	)	 	142,622		
Total Assets	$	6,279,707		 	$	5,541,234		 	$	3,627,001		 	$	(7,261,998	)	 	$	8,185,944		
Liabilities and Stockholders’ Equity	 	 	 	 	 	 	 	 	 	
Current Liabilities:	 	 	 	 	 	 	 	 	 	
Accounts payable	$	1,669		 	$	355,545		 	$	377,924		 	$	—		 	$	735,138		
Intercompany payables, net	—		 	—		 	26,088		 	(26,088	)	 	—		
Accrued expenses:	 	 	 	 	 	 	 	 	 	
Accrued payroll-related liabilities	4,726		 	48,724		 	49,512		 	—		 	102,962		
Other accrued expenses	5,085		 	90,554		 	133,017		 	—		 	228,656		
Other current liabilities	283		 	16,820		 	23,691		 	—		 	40,794		
Current portion of long-term obligations	19,262		 	2,826		 	38,744		 	—		 	60,832		
Total Current Liabilities	31,025		 	514,469		 	648,976		 	(26,088	)	 	1,168,382		
Long-Term Obligations, Excluding Current Portion	2,146,730		 	8,449		 	1,119,450		 	—		 	3,274,629		
Intercompany Notes Payable	750,000		 	1,114,430		 	46,642		 	(1,911,072	)	 	—		
Deferred Income Taxes	—		 	111,766		 	121,416		 	(7,844	)	 	225,338		
Other Noncurrent Liabilities	44,313		 	124,822		 	40,821		 	—		 	209,956		
Stockholders’ Equity	3,307,639		 	3,667,298		 	1,649,696		 	(5,316,994	)	 	3,307,639		
Total Liabilities and Stockholders' Equity	$	6,279,707		 	$	5,541,234		 	$	3,627,001		 	$	(7,261,998	)	 	$	8,185,944		

28

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)	
																				
 	December 31, 2015	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Assets	 	 	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	 	 	
Cash and equivalents	$	17,616		 	$	13,432		 	$	56,349		 	$	—		 	$	87,397		
Receivables, net	—		 	214,502		 	375,658		 	—		 	590,160		
Intercompany receivables, net	3		 	—		 	13,544		 	(13,547	)	 	—		
Inventories, net	—		 	1,060,834		 	495,718		 	—		 	1,556,552		
Prepaid expenses and other current assets	15,254		 	44,810		 	46,539		 	—		 	106,603		
Total Current Assets	32,873		 	1,333,578		 	987,808		 	(13,547	)	 	2,340,712		
Property, Plant and Equipment, net	339		 	494,658		 	201,570		 	—		 	696,567		
Intangible Assets:	 	 	 	 	 	 	 	 	 	
Goodwill	—		 	1,640,745		 	678,501		 	—		 	2,319,246		
Other intangibles, net	—		 	141,537		 	73,580		 	—		 	215,117		
Investment in Subsidiaries	3,456,837		 	285,284		 	—		 	(3,742,121	)	 	—		
Intercompany Notes Receivable	630,717		 	61,764		 	—		 	(692,481	)	 	—		
Other Assets	35,649		 	28,184		 	18,218		 	(5,856	)	 	76,195		
Total Assets	$	4,156,415		 	$	3,985,750		 	$	1,959,677		 	$	(4,454,005	)	 	$	5,647,837		
Liabilities and Stockholders’ Equity	 	 	 	 	 	 	 	 	 	
Current Liabilities:	 	 	 	 	 	 	 	 	 	
Accounts payable	$	681		 	$	229,519		 	$	185,388		 	$	—		 	$	415,588		
Intercompany payables, net	—		 	13,544		 	3		 	(13,547	)	 	—		
Accrued expenses:	 	 	 	 	 	 	 	 	 	
Accrued payroll-related liabilities	4,395		 	48,698		 	33,434		 	—		 	86,527		
Other accrued expenses	5,399		 	80,886		 	75,940		 	—		 	162,225		
Other current liabilities	284		 	15,953		 	15,359		 	—		 	31,596		
Current portion of long-term obligations	21,041		 	1,425		 	33,568		 	—		 	56,034		
Total Current Liabilities	31,800		 	390,025		 	343,692		 	(13,547	)	 	751,970		
Long-Term Obligations, Excluding Current Portion	976,353		 	7,487		 	544,828		 	—		 	1,528,668		
Intercompany Notes Payable	—		 	615,488		 	76,993		 	(692,481	)	 	—		
Deferred Income Taxes	—		 	113,905		 	19,190		 	(5,856	)	 	127,239		
Other Noncurrent Liabilities	33,580		 	70,109		 	21,589		 	—		 	125,278		
Stockholders’ Equity	3,114,682		 	2,788,736		 	953,385		 	(3,742,121	)	 	3,114,682		
Total Liabilities and Stockholders’ Equity	$	4,156,415		 	$	3,985,750		 	$	1,959,677		 	$	(4,454,005	)	 	$	5,647,837		

29

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)	
																				
 	For the Three Months Ended June 30, 2016	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Revenue	$	—		 	$	1,530,947		 	$	953,917		 	$	(34,171	)	 	$	2,450,693		
Cost of goods sold	—		 	951,356		 	611,561		 	(34,171	)	 	1,528,746		
Gross margin	—		 	579,591		 	342,356		 	—		 	921,947		
Facility and warehouse expenses	—		 	118,649		 	60,021		 	—		 	178,670		
Distribution expenses	—		 	118,321		 	66,010		 	—		 	184,331		
Selling, general and administrative expenses	8,887		 	132,488		 	112,778		 	—		 	254,153		
Restructuring and acquisition related expenses	—		 	7,082		 	1,998		 	—		 	9,080		
Depreciation and amortization	33		 	23,461		 	29,035		 	—		 	52,529		
Operating (loss) income	(8,920	)	 	179,590		 	72,514		 	—		 	243,184		
Other expense (income):	 	 	 	 	 	 	 	 	 	
Interest expense (income), net	17,804		 	(309	)	 	8,886		 	—		 	26,381		
Intercompany interest (income) expense, net	(2,355	)	 	2,376		 	(21	)	 	—		 	—		
Other expense (income), net	33		 	(284	)	 	1,590		 	—		 	1,339		
Total other expense, net	15,482		 	1,783		 	10,455		 	—		 	27,720		
(Loss) income before (benefit) provision for income taxes	(24,402	)	 	177,807		 	62,059		 	—		 	215,464		
(Benefit) provision for income taxes	(9,384	)	 	72,019		 	12,239		 	—		 	74,874		
Equity in earnings of unconsolidated subsidiaries	—		 	347		 	(200	)	 	—		 	147		
Equity in earnings of subsidiaries	155,755		 	431		 	—		 	(156,186	)	 	—		
Net income	$	140,737		 	$	106,566		 	$	49,620		 	$	(156,186	)	 	$	140,737		

30

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)	
																				
 	For the Three Months Ended June 30, 2015	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Revenue	$	—		 	$	1,269,541		 	$	599,744		 	$	(31,215	)	 	$	1,838,070		
Cost of goods sold	—		 	770,026		 	375,315		 	(31,215	)	 	1,114,126		
Gross margin	—		 	499,515		 	224,429		 	—		 	723,944		
Facility and warehouse expenses	—		 	100,289		 	36,090		 	—		 	136,379		
Distribution expenses	—		 	102,753		 	47,286		 	—		 	150,039		
Selling, general and administrative expenses	8,761		 	119,958		 	77,077		 	—		 	205,796		
Restructuring and acquisition related expenses	—		 	1,185		 	478		 	—		 	1,663		
Depreciation and amortization	39		 	19,873		 	9,870		 	—		 	29,782		
Operating (loss) income	(8,800	)	 	155,457		 	53,628		 	—		 	200,285		
Other expense (income):	 	 	 	 	 	 	 	 	 	
Interest expense (income), net	12,241		 	(172	)	 	2,553		 	—		 	14,622		
Intercompany interest (income) expense, net	(10,378	)	 	7,056		 	3,322		 	—		 	—		
Other expense (income), net	2		 	(1,106	)	 	1,201		 	—		 	97		
Total other expense, net	1,865		 	5,778		 	7,076		 	—		 	14,719		
(Loss) income before (benefit) provision for income taxes	(10,665	)	 	149,679		 	46,552		 	—		 	185,566		
(Benefit) provision for income taxes	(4,294	)	 	59,495		 	9,481		 	—		 	64,682		
Equity in earnings of unconsolidated subsidiaries	—		 	19		 	(1,181	)	 	—		 	(1,162	)	
Equity in earnings of subsidiaries	126,093		 	7,335		 	—		 	(133,428	)	 	—		
Net income	$	119,722		 	$	97,538		 	$	35,890		 	$	(133,428	)	 	$	119,722		

31

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)

 	For the Six Months Ended June 30, 2016	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Revenue	$	—		 	$	2,849,114		 	$	1,589,554		 	$	(66,499	)	 	$	4,372,169		
Cost of goods sold	—		 	1,746,596		 	1,009,688		 	(66,499	)	 	2,689,785		
Gross margin	—		 	1,102,518		 	579,866		 	—		 	1,682,384		
Facility and warehouse expenses	—		 	233,859		 	102,416		 	—		 	336,275		
Distribution expenses	—		 	222,475		 	114,199		 	—		 	336,674		
Selling, general and administrative expenses	19,266		 	259,156		 	194,049		 	—		 	472,471		
Restructuring and acquisition related expenses	—		 	11,118		 	12,773		 	—		 	23,891		
Depreciation and amortization	69		 	44,005		 	40,143		 	—		 	84,217		
Operating (loss) income	(19,335	)	 	331,905		 	116,286		 	—		 	428,856		
Other expense (income):	 	 	 	 	 	 	 	 	 	
Interest expense (income), net	29,921		 	(166	)	 	11,218		 	—		 	40,973		
Intercompany interest (income) expense, net	(13,032	)	 	8,966		 	4,066		 	—		 	—		
Loss on debt extinguishment	2,894		 	—		 	23,756		 	—		 	26,650		
Gains on foreign exchange contracts - acquisition related	(18,342	)	 	—		 	—		 	—		 	(18,342	)	
Other (income) expense, net	(78	)	 	(3,084	)	 	1,612		 	—		 	(1,550	)	
Total other expense, net	1,363		 	5,716		 	40,652		 	—		 	47,731		
(Loss) income before (benefit) provision for income taxes	(20,698	)	 	326,189		 	75,634		 	—		 	381,125		
(Benefit) provision for income taxes	(7,961	)	 	125,464		 	14,938		 	—		 	132,441		
Equity in earnings of unconsolidated subsidiaries	(795	)	 	352		 	228		 	—		 	(215	)	
Equity in earnings of subsidiaries	262,001		 	12,373		 	—		 	(274,374	)	 	—		
Net income	$	248,469		 	$	213,450		 	$	60,924		 	$	(274,374	)	 	$	248,469		

32

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)

 	For the Six Months Ended June 30, 2015	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Revenue	$	—		 	$	2,495,449		 	$	1,182,687		 	$	(66,154	)	 	$	3,611,982		
Cost of goods sold	—		 	1,510,829		 	743,884		 	(66,154	)	 	2,188,559		
Gross margin	—		 	984,620		 	438,803		 	—		 	1,423,423		
Facility and warehouse expenses	—		 	198,050		 	70,986		 	—		 	269,036		
Distribution expenses	—		 	198,745		 	93,008		 	—		 	291,753		
Selling, general and administrative expenses	16,392		 	241,620		 	151,025		 	—		 	409,037		
Restructuring and acquisition related expenses	—		 	7,245		 	906		 	—		 	8,151		
Depreciation and amortization	79		 	39,764		 	19,392		 	—		 	59,235		
Operating (loss) income	(16,471	)	 	299,196		 	103,486		 	—		 	386,211		
Other expense (income):	 	 	 	 	 	 	 	 	 	
Interest expense (income), net	24,555		 	(129	)	 	5,102		 	—		 	29,528		
Intercompany interest (income) expense, net	(21,201	)	 	14,315		 	6,886		 	—		 	—		
Other expense (income), net	27		 	(2,841	)	 	4,830		 	—		 	2,016		
Total other expense, net	3,381		 	11,345		 	16,818		 	—		 	31,544		
(Loss) income before (benefit) provision for income taxes	(19,852	)	 	287,851		 	86,668		 	—		 	354,667		
(Benefit) provision for income taxes	(8,049	)	 	115,272		 	17,557		 	—		 	124,780		
Equity in earnings of unconsolidated subsidiaries	—		 	30		 	(3,100	)	 	—		 	(3,070	)	
Equity in earnings of subsidiaries	238,620		 	14,595		 	—		 	(253,215	)	 	—		
Net income	$	226,817		 	$	187,204		 	$	66,011		 	$	(253,215	)	 	$	226,817		

33

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)	
																				
 	For the Three Months Ended June 30, 2016	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Net income	$	140,737		 	$	106,566		 	$	49,620		 	$	(156,186	)	 	$	140,737		
Other comprehensive (loss) income:	 	 	 	 	 	 	 	 	 	
Foreign currency translation	(73,257	)	 	(15,116	)	 	(73,830	)	 	88,946		 	(73,257	)	
Net change in unrecognized gains/losses on derivative instruments, net of tax	(3,614	)	 	—		 	99		 	(99	)	 	(3,614	)	
Net change in unrealized gains/losses on pension plans, net of tax	120		 	—		 	120		 	(120	)	 	120		
Total other comprehensive loss	(76,751	)	 	(15,116	)	 	(73,611	)	 	88,727		 	(76,751	)	
Total comprehensive income (loss)	$	63,986		 	$	91,450		 	$	(23,991	)	 	$	(67,459	)	 	$	63,986		

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)	
																				
 	For the Three Months Ended June 30, 2015	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Net income	$	119,722		 	$	97,538		 	$	35,890		 	$	(133,428	)	 	$	119,722		
Other comprehensive income (loss):	 	 	 	 	 	 	 	 	 	
Foreign currency translation	44,510		 	13,134		 	44,216		 	(57,350	)	 	44,510		
Net change in unrecognized gains/losses on derivative instruments, net of tax	918		 	—		 	191		 	(191	)	 	918		
Change in unrealized gain on pension plans, net of tax	(21	)	 	—		 	(21	)	 	21		 	(21	)	
Total other comprehensive income	45,407		 	13,134		 	44,386		 	(57,520	)	 	45,407		
Total comprehensive income	$	165,129		 	$	110,672		 	$	80,276		 	$	(190,948	)	 	$	165,129		

34

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)

 	For the Six Months Ended June 30, 2016	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Net income	$	248,469		 	$	213,450		 	$	60,924		 	$	(274,374	)	 	$	248,469		
Other comprehensive (loss) income:	 	 	 	 	 	 	 	 	 	
Foreign currency translation	(73,117	)	 	(17,971	)	 	(76,869	)	 	94,840		 	(73,117	)	
Net change in unrecognized gains/losses on derivative instruments, net of tax	(3,182	)	 	—		 	195		 	(195	)	 	(3,182	)	
Net change in unrealized gains/losses on pension plans, net of tax	267		 	—		 	267		 	(267	)	 	267		
Total other comprehensive loss	(76,032	)	 	(17,971	)	 	(76,407	)	 	94,378		 	(76,032	)	
Total comprehensive income (loss)	$	172,437		 	$	195,479		 	$	(15,483	)	 	$	(179,996	)	 	$	172,437		

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)

 	For the Six Months Ended June 30, 2015	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
Net income	$	226,817		 	$	187,204		 	$	66,011		 	$	(253,215	)	 	$	226,817		
Other comprehensive (loss) income:	 	 	 	 	 	 	 	 	 	
Foreign currency translation	(10,300	)	 	(1,238	)	 	(8,583	)	 	9,821		 	(10,300	)	
Net change in unrecognized gains/losses on derivative instruments, net of tax	1,201		 	—		 	129		 	(129	)	 	1,201		
Change in unrealized gains/losses on pension plans, net of tax	107		 	—		 	107		 	(107	)	 	107		
Total other comprehensive loss	(8,992	)	 	(1,238	)	 	(8,347	)	 	9,585		 	(8,992	)	
Total comprehensive income	$	217,825		 	$	185,966		 	$	57,664		 	$	(243,630	)	 	$	217,825		

35

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)	
																				
 	For the Six Months Ended June 30, 2016	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
CASH FLOWS FROM OPERATING ACTIVITIES:	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	$	136,098		 	$	300,978		 	$	66,346		 	$	(148,192	)	 	$	355,230		
CASH FLOWS FROM INVESTING ACTIVITIES:	 	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment	(2	)	 	(57,742	)	 	(44,575	)	 	—		 	(102,319	)	
Investment and intercompany note activity with subsidiaries	(1,293,298	)	 	(34,448	)	 	—		 	1,327,746		 	—		
Acquisitions, net of cash acquired	—		 	(661,852	)	 	(606,989	)	 	—		 	(1,268,841	)	
Proceeds from foreign exchange contracts	18,342		 	—		 	—		 	—		 	18,342		
Other investing activities, net	—		 	400		 	10,913		 	—		 	11,313		
Net cash used in investing activities	(1,274,958	)	 	(753,642	)	 	(640,651	)	 	1,327,746		 	(1,341,505	)	
CASH FLOWS FROM FINANCING ACTIVITIES:	 	 	 	 	 	 	 	 	 	
Proceeds from exercise of stock options	4,889		 	—		 	—		 	—		 	4,889		
Excess tax benefit from stock-based payments	6,685		 	—		 	—		 	—		 	6,685		
Taxes paid related to net share settlements of stock-based compensation awards	(2,281	)	 	—		 	—		 	—		 	(2,281	)	
Debt issuance costs	(7,100	)	 	—		 	(9,071	)	 	—		 	(16,171	)	
Proceeds from issuance of Euro notes	—		 	—		 	563,450		 	—		 	563,450		
Borrowings under revolving credit facilities	1,204,000		 	—		 	618,020		 	—		 	1,822,020		
Repayments under revolving credit facilities	(119,000	)	 	—		 	(893,362	)	 	—		 	(1,012,362	)	
Borrowings under term loans	89,317		 	—		 	249,161		 	—		 	338,478		
Repayments under term loans	(3,122	)	 	—		 	(1,599	)	 	—		 	(4,721	)	
Borrowings under receivables securitization facility	—		 	—		 	97,000		 	—		 	97,000		
Repayments under receivables securitization facility	—		 	—		 	(66,480	)	 	—		 	(66,480	)	
Repayments of other debt, net	—		 	(1,657	)	 	(6,167	)	 	—		 	(7,824	)	
Repayment of Rhiag debt and related payments	—		 	—		 	(543,347	)	 	—		 	(543,347	)	
Payments of other obligations	—		 	(1,371	)	 	—		 	—		 	(1,371	)	
Investment and intercompany note activity with parent	—		 	621,619		 	706,127		 	(1,327,746	)	 	—		
Dividends	—		 	(148,192	)	 	—		 	148,192		 	—		
Net cash provided by financing activities	1,173,388		 	470,399		 	713,732		 	(1,179,554	)	 	1,177,965		
Effect of exchange rate changes on cash and equivalents	—		 	(27	)	 	(5,857	)	 	—		 	(5,884	)	
Net increase in cash and equivalents	34,528		 	17,708		 	133,570		 	—		 	185,806		
Cash and equivalents, beginning of period	17,616		 	13,432		 	56,349		 	—		 	87,397		
Cash and equivalents, end of period	$	52,144		 	$	31,140		 	$	189,919		 	$	—		 	$	273,203		

36

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)	
																				
 	For the Six Months Ended June 30, 2015	
 	Parent	 	Guarantors	 	Non-Guarantors	 	Eliminations	 	Consolidated	
CASH FLOWS FROM OPERATING ACTIVITIES:	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	$	121,024		 	$	188,713		 	$	89,630		 	$	(116,668	)	 	$	282,699		
CASH FLOWS FROM INVESTING ACTIVITIES:	 	 	 	 	 	 	 	 	 	
Purchases of property, plant and equipment	(3	)	 	(34,791	)	 	(31,969	)	 	—		 	(66,763	)	
Investment and intercompany note activity with subsidiaries	30,818		 	—		 	—		 	(30,818	)	 	—		
Acquisitions, net of cash acquired	—		 	(6,583	)	 	(30,625	)	 	—		 	(37,208	)	
Other investing activities, net	—		 	585		 	(5,794	)	 	—		 	(5,209	)	
Net cash provided by (used in) investing activities	30,815		 	(40,789	)	 	(68,388	)	 	(30,818	)	 	(109,180	)	
CASH FLOWS FROM FINANCING ACTIVITIES:	 	 	 	 	 	 	 	 	 	
Proceeds from exercise of stock options	3,288		 	—		 	—		 	—		 	3,288		
Excess tax benefit from stock-based payments	6,737		 	—		 	—		 	—		 	6,737		
Taxes paid related to net share settlements of stock-based compensation awards	(5,243	)	 	—		 	—		 	—		 	(5,243	)	
Borrowings under revolving credit facilities	132,000		 	—		 	67,621		 	—		 	199,621		
Repayments under revolving credit facilities	(215,000	)	 	—		 	(79,276	)	 	—		 	(294,276	)	
Repayments under term loans	(11,250	)	 	—		 	—		 	—		 	(11,250	)	
Borrowings under receivables securitization facility	—		 	—		 	2,100		 	—		 	2,100		
Repayments under receivables securitization facility	—		 	—		 	(1,758	)	 	—		 	(1,758	)	
Repayments of other debt, net	(31,500	)	 	(596	)	 	(9,994	)	 	—		 	(42,090	)	
Payments of other obligations	—		 	(2,050	)	 	—		 	—		 	(2,050	)	
Investment and intercompany note activity with parent	—		 	(32,051	)	 	1,233		 	30,818		 	—		
Dividends	—		 	(116,668	)	 	—		 	116,668		 	—		
Net cash used in financing activities	(120,968	)	 	(151,365	)	 	(20,074	)	 	147,486		 	(144,921	)	
Effect of exchange rate changes on cash and equivalents	—		 	53		 	167		 	—		 	220		
Net increase (decrease) in cash and equivalents	30,871		 	(3,388	)	 	1,335		 	—		 	28,818		
Cash and equivalents, beginning of period	14,930		 	32,103		 	67,572		 	—		 	114,605		
Cash and equivalents, end of period	$	45,801		 	$	28,715		 	$	68,907		 	$	—		 	$	143,423		

37

Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements. Words such as “may,” “will,” “plan,” “should,” “expect,” “anticipate,” “believe,” “if,” “estimate,” “intend,” “project” and similar words or expressions are used to identify these forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. However, these forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different. These factors include, among other things, those described under Risk Factors in Item 1A of our 2015 Annual Report on Form 10-K, filed with the SEC on February 25, 2016, as supplemented in subsequent filings, including this Quarterly Report on Form 10-Q.
Other matters set forth in this Quarterly Report may also cause our actual future results to differ materially from these forward-looking statements. We cannot assure you that our expectations will prove to be correct. In addition, all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements mentioned above. You should not place undue reliance on these forward-looking statements. All of these forward-looking statements are based on our expectations as of the date of this Quarterly Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	
Overview
We are a global distributor of vehicle products, including replacement parts, components and systems used in the repair and maintenance of vehicles, specialty vehicle products and accessories, and automotive glass products.
Buyers of vehicle replacement products have the option to purchase from primarily five sources: new products produced by original equipment manufacturers ("OEMs"); new products produced by companies other than the OEMs, which are sometimes referred to as aftermarket products; recycled products obtained from salvage vehicles; used products that have been refurbished; and used products that have been remanufactured. We distribute a variety of products to collision and mechanical repair shops, including aftermarket collision and mechanical products, recycled collision and mechanical products, refurbished collision products such as wheels, bumper covers and lights, and remanufactured engines. Collectively, we refer to these products as alternative parts because they are not new OEM products.
We are the nation’s largest provider of alternative vehicle collision replacement products and a leading provider of alternative vehicle mechanical replacement products, with our sales, processing, and distribution facilities reaching most major markets in the United States and Canada. We are also a leading provider of alternative vehicle replacement and maintenance products in the United Kingdom, the Benelux region (Belgium, Netherlands, and Luxembourg), Italy, Czech Republic and Switzerland. In addition to our wholesale operations, we operate self service retail facilities across the U.S. that sell recycled automotive products from end-of-life-vehicles. We are also a leading distributor of specialty vehicle aftermarket equipment and accessories reaching most major markets in the U.S and Canada.
On April 21, 2016, we expanded our product offerings to include OEM and aftermarket automotive glass products through our acquisition of Pittsburgh Glass Works LLC (“PGW”). With our acquisition of PGW, we are a leading global distributor and manufacturer of automotive glass products reaching most major markets in North America, Europe, and Asia.
We are organized into five operating segments: Wholesale - North America; Europe; Specialty; Glass; and Self Service. We aggregate our Wholesale - North America and Self Service operating segments into one reportable segment, North America, resulting in four reportable segments: North America, Europe, Specialty and Glass.
Our revenue, cost of goods sold, and operating results have fluctuated on a quarterly and annual basis in the past and can be expected to continue to fluctuate in the future as a result of a number of factors, some of which are beyond our control. Please refer to the factors discussed in Forward-Looking Statements above. Due to these factors and others, which may be unknown to us at this time, our operating results in future periods can be expected to fluctuate. Accordingly, our historical results of operations may not be indicative of future performance.
Acquisitions and Investments
Since our inception in 1998, we have pursued a growth strategy through both organic growth and acquisitions. We have pursued acquisitions that we believe will help drive profitability, cash flow and stockholder value. We target companies that are market leaders, will expand our geographic presence and will enhance our ability to provide a wide array of automotive products to our customers through our distribution network.

38

On March 18, 2016, LKQ and its wholly-owned subsidiary LKQ Italia S.r.l. acquired Rhiag-Inter Auto Parts Italia S.p.A. ("Rhiag"), a distributor of aftermarket spare parts for passenger cars and commercial vehicles in Italy, Czech Republic, Switzerland, Hungary, Romania, Ukraine, Bulgaria, Slovakia, Poland and Spain. This acquisition expands LKQ's geographic presence in continental Europe, and we believe the acquisition will generate potential purchasing synergies.
On April 21, 2016, LKQ acquired PGW, a leading global distributor and manufacturer of automotive glass products. PGW’s business comprises wholesale and retail distribution services, automotive glass manufacturing, and retailer alliance partnerships. The acquisition expands our addressable market in North America and globally. Additionally, we believe the acquisition will create potential distribution synergies with our existing network.
In addition to our acquisitions of Rhiag and PGW, we acquired two wholesale business in Europe during the six months ended June 30, 2016 .
During the year ended December 31, 2015, we completed 18 acquisitions, including 4 wholesale businesses in North America and 12 wholesale businesses in Europe, a self service retail operation, and a specialty vehicle aftermarket business. Our wholesale business acquisitions in North America included PartsChannel, Inc. ("Parts Channel"), an aftermarket collision parts distributor. The specialty aftermarket business acquired was The Coast Distribution System, Inc. ("Coast"), a supplier of replacement parts, supplies and accessories for the RV and outdoor recreation markets. Our European acquisitions included 11 aftermarket parts distribution businesses in the Netherlands, 9 of which were former customers of and distributors for our Netherlands subsidiary, Sator, and were acquired with the objective of expanding our distribution network in the Netherlands. Our other acquisitions completed in 2015 enabled us to expand our geographic presence.
See Note 2, "Business Combinations " to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information related to our acquisitions.
Sources of Revenue
We report our revenue in two categories: (i) parts and services and (ii) other. Our parts revenue is generated from the sale of vehicle products and related services including (i) aftermarket, other new and refurbished products; (ii) recycled, remanufactured and related products and services; and (iii) manufactured products. Our service revenue is generated primarily from the sale of extended warranties, fees for admission to our self service yards, and processing fees related to the secure disposal of vehicles. During the six months ended June 30, 2016 , parts and services revenue represented approximately 95% of our consolidated revenue.
The majority of our parts and services revenue is generated from the sale of vehicle replacement products to collision and mechanical repair shops. In North America, our vehicle replacement products include sheet metal crash parts such as doors, hoods, and fenders; bumper covers; mirrors and grills; head and tail lamps; wheels; and large mechanical items such as engines and transmissions. In Europe, our products include a wide variety of small mechanical products such as filters, belts and hoses, spark plugs, alternators and water pumps, batteries, suspension and brake parts, clutches, and oil and lubricants. The demand for these products is influenced by several factors, including the number of vehicles in operation, the number of miles being driven, the frequency and severity of vehicle accidents, the age profile of vehicles in accidents, seasonal weather patterns and local weather conditions, and the availability and pricing of new OEM parts. With respect to collision related products, automobile insurers exert significant influence over collision repair shops as to how an insured vehicle is repaired and the cost level of the products used in the repair process. Accordingly, we consider automobile insurers to be key demand drivers of our vehicle replacement products. While they are not our direct customers, we do provide insurance carriers services in an effort to promote the increased usage of alternative replacement products in the repair process. Such services include the review of vehicle repair order estimates, direct quotation services to insurance company adjusters, and an aftermarket parts quality and service assurance program. We neither charge a fee to the insurance carriers for these services nor adjust our pricing of products for our customers when we perform these services for insurance carriers. There is no standard price for many of our vehicle replacement products, but rather a pricing structure that varies from day to day based upon such factors as new OEM product prices, product availability, quality, demand, the age and mileage of the vehicle from which a recycled part was obtained, competitor pricing and our product cost.
Our revenue from aftermarket, other new and refurbished products also includes revenue generated from the sale of specialty aftermarket vehicle equipment and accessories. These products are primarily sold to a large customer base of specialty vehicle retailers and equipment installers, including mostly independent, single-site operators. Specialty vehicle aftermarket products are typically installed on vehicles within the first year of ownership to enhance functionality, performance or aesthetics. As a result, the demand for these products is influenced by new and used vehicle sales and the overall economic health of vehicle owners, which may be affected by general business conditions, interest rates, inflation, consumer debt levels and other matters that influence consumer confidence and spending. The prices for our specialty vehicle products are based on manufacturers' suggested retail prices, with discounts applied based on prevailing market conditions, customer volumes and promotions that we may offer from time to time.

39

With our April 21, 2016 acquisition of PGW, we present a new revenue product category, manufactured products, which includes revenue from the production and fabrication of shaped glass parts and attachment of assemblies. Products include laminated, laminated coated, and tempered glass parts, which are delivered either directly to the assembly lines of vehicle manufacturers or to other suppliers performing additional complex assemblies. Additionally, our revenue from aftermarket, other new and refurbished products includes revenue generated from the distribution of purchased and internally manufactured automotive replacement glass and assemblies, such as backlites, roof panels, sidelites, windshields, and glass installation accessories. These products are sold primarily to glass repair and replacement shops, and prices for these products are based on manufacturers' suggested retail prices, with discounts applied based on prevailing market conditions, customer volumes and promotions that we may offer from time to time.
For the six months ended June 30, 2016 , revenue from other sources represented approximately 5% of our consolidated sales. These other sources include scrap sales, bulk sales to mechanical remanufacturers (including cores), and sales of aluminum ingots and sows from our furnace operations. We derive scrap metal from several sources, including vehicles that have been used in both our wholesale and self service recycling operations and from OEMs and other entities that contract with us for secure disposal of "crush only" vehicles. Other revenue will vary from period to period based on fluctuations in commodity prices and the volume of materials sold.
Cost of Goods Sold
Our cost of goods sold for aftermarket products includes the price we pay for the parts, freight, and overhead costs related to the purchasing, warehousing and distribution of our inventory, including labor, facility and equipment costs and depreciation. Our aftermarket products are acquired from a number of vendors. Our cost of goods sold for refurbished products includes the price we pay for cores, freight, and costs to refurbish the parts, including direct and indirect labor, facility and equipment costs, depreciation and other overhead related to our refurbishing operations. Our cost of goods sold for manufactured automotive glass products includes the price we pay for raw materials, freight, and costs to produce the parts, including direct and indirect labor, facility and equipment costs, depreciation and other overhead related to our glass operations.
Our cost of goods sold for recycled products includes the price we pay for the salvage vehicle and, where applicable, auction, towing and storage fees. Prices for salvage vehicles may be impacted by a variety of factors, including the number of buyers competing to purchase the vehicles, the demand and pricing trends for used vehicles, the number of vehicles designated as “total losses” by insurance companies, the production level of new vehicles (which provides the source from which salvage vehicles ultimately come), the age of vehicles at auction and the status of laws regulating bidders or exporters of salvage vehicles. From time to time, we may also adjust our buying strategy to target vehicles with different attributes (for example, age, level of damage, and revenue potential). Due to changes relating to these factors, we have seen the prices we pay for salvage vehicles fluctuate over time. Our cost of goods sold also includes labor and other costs we incur to acquire and dismantle such vehicles. Our labor and labor-related costs related to acquisition and dismantling generally account for between 9% and 11% of our cost of goods sold for vehicles we dismantle. The acquisition and dismantling of salvage vehicles is a manual process and, as a result, energy costs are not material. Our cost of goods sold for remanufactured products includes the price we pay for cores; freight; and costs to remanufacture the products, including direct and indirect labor, facility and equipment costs, depreciation and other overhead related to our remanufacturing operations.
Some of our salvage mechanical products are sold with a standard six-month warranty against defects. Additionally, some of our remanufactured engines are sold with a standard three-year warranty against defects. We also provide a limited lifetime warranty for certain of our aftermarket products that is supported by certain of the suppliers of those products. We record the estimated warranty costs at the time of sale using historical warranty claims information to project future warranty claims activity and related expenses.
Other revenue is primarily generated from the hulks and unusable parts of the vehicles we acquire for our wholesale and self service recycled product operations, and therefore, the costs of these sales include the proportionate share of the price we pay for the salvage vehicles as well as the applicable auction, storage and towing fees and internal costs to purchase and dismantle the vehicles. Our cost of goods sold for other revenue will fluctuate based on the prices paid for salvage vehicles, which may be impacted by a variety of factors as discussed above.

Expenses
Our facility and warehouse expenses primarily include our costs to operate our aftermarket warehouses, salvage yards and self service retail facilities. These costs include personnel expenses such as wages, incentive compensation and employee benefits for plant management and facility and warehouse personnel, as well as rent for our facilities and related utilities, property taxes, repairs and maintenance. The costs included in facility and warehouse expenses do not relate to inventory processing or conversion activities and, as such, are classified below the gross margin line on our Unaudited Condensed Consolidated Statements of Income.

40

Our distribution expenses primarily include our costs to prepare and deliver our products to our customers, except for PGW's OEM glass products, which are generally picked up at our facilities by the customer. PGW's distribution costs thus tend to be lower than our other businesses. Included in our distribution expense category are personnel costs such as wages, employee benefits and incentive compensation for drivers; third party freight costs; fuel; and expenses related to our delivery and transfer trucks, including vehicle leases, repairs and maintenance and insurance.
Our selling and marketing expenses primarily include salary, commission and other incentive compensation expenses for sales personnel; advertising, promotion and marketing costs; credit card fees; telephone and other communication expenses; and bad debt expense. Personnel costs generally account for between 70% and 75% of our selling and marketing expenses. Most of our sales personnel are paid on a commission basis. The number and quality of our sales force is critical to our ability to respond to our customers’ needs and increase our sales volume. Our objective is to continually evaluate our sales force, develop and implement training programs, and utilize appropriate measurements to assess our selling effectiveness.
Our general and administrative expenses primarily include the costs of our corporate offices and field support center, which provide management, treasury, accounting, legal, payroll, business development, human resources and information systems functions. General and administrative expenses include wages, benefits, stock-based compensation and other incentive compensation for corporate, regional and administrative personnel; information systems support and maintenance expenses; research and development expenses; and accounting, legal and other professional fees.
Seasonality
Our operating results are subject to quarterly variations based on a variety of factors, influenced primarily by seasonal changes in weather patterns. During the winter months, we tend to have higher demand for our vehicle replacement products because there are more weather related accidents, which generate repairs. We expect our specialty vehicle operations to generate greater revenue and earnings in the first half of the year, when vehicle owners tend to install this equipment. We expect our aftermarket glass operations to generate greater revenue and earnings in the second and third quarters, when the demand for glass replacements increases after the winter weather. Operating results in our OEM glass operations fluctuate from quarter to quarter based on manufacturer production schedules, although production tends to slow down in late summer and near holidays, especially at calendar year-end.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 , which we filed with the SEC on February 25, 2016, includes a summary of the critical accounting policies and estimates we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies or estimates that have had a material impact on our reported amounts of assets, liabilities, revenue or expenses during the six months ended June 30, 2016 . However, we have evaluated our goodwill for impairment as of an interim date as described below.
Goodwill Impairment
We are required to test our goodwill for impairment at least annually or whenever events or circumstances indicate that impairment may have occurred. In 2015, we performed the step one goodwill impairment test for our Self Service reporting unit; the results of our analysis indicated that the fair value of the Self Service reporting unit exceeded its carrying value by approximately 11%. In 2016, we will continue to monitor the performance of our Self Service reporting unit as changes to our forecasts may result in the determination that an impairment adjustment is required. As of the quarter ended June 30, 2016, the forecasts utilized in our 2015 Self Service annual impairment test remain unchanged.
Recently Issued Accounting Pronouncements
See “Recent Accounting Pronouncements” in Note 3, "Financial Statement Information " to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for information related to new accounting standards.

41

Financial Information by Geographic Area
See Note 13, "Segment and Geographic Information " to the unaudited condensed consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for information related to our revenue and long-lived assets by geographic region.
Results of Operations—Consolidated
The following table sets forth statements of income data as a percentage of total revenue for the periods indicated:

												
 	Three Months Ended	 	Six Months Ended	
 	June 30,	 	June 30,	
 	2016	 	2015	 	2016	 	2015	
Revenue	100.0	%	 	100.0	 %	 	100.0	 %	 	100.0	 %	
Cost of goods sold	62.4	%	 	60.6	 %	 	61.5	 %	 	60.6	 %	
Gross margin	37.6	%	 	39.4	 %	 	38.5	 %	 	39.4	 %	
Facility and warehouse expenses	7.3	%	 	7.4	 %	 	7.7	 %	 	7.4	 %	
Distribution expenses	7.5	%	 	8.2	 %	 	7.7	 %	 	8.1	 %	
Selling, general and administrative expenses	10.4	%	 	11.2	 %	 	10.8	 %	 	11.3	 %	
Restructuring and acquisition related expenses	0.4	%	 	0.1	 %	 	0.5	 %	 	0.2	 %	
Depreciation and amortization	2.1	%	 	1.6	 %	 	1.9	 %	 	1.6	 %	
Operating income	9.9	%	 	10.9	 %	 	9.8	 %	 	10.7	 %	
Other expense, net	1.1	%	 	0.8	 %	 	1.1	 %	 	0.9	 %	
Income before provision for income taxes	8.8	%	 	10.1	 %	 	8.7	 %	 	9.8	 %	
Provision for income taxes	3.1	%	 	3.5	 %	 	3.0	 %	 	3.5	 %	
Equity in earnings of unconsolidated subsidiaries	0.0	%	 	(0.1	)%	 	(0.0	 )%	 	(0.1	)%	
Net income	5.7	%	 	6.5	 %	 	5.7	 %	 	6.3	 %	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015
Revenue. The following table summarizes the changes in revenue by category (in thousands):

																				
 	Three Months Ended	 	 	 	 	 	 	 	 	
 	June 30,	 	Percentage Change in Revenue	
 	2016	 	2015	 	Organic	 	Acquisition	 	Foreign Exchange	 	Total Change	
Parts & services revenue	$	2,331,989		 	$	1,704,348		 	5.4	 %	 	32.8	%	 	(1.4	)%	 	36.8	 %	
Other revenue	118,704		 	133,722		 	(16.2	)%	 	5.2	%	 	(0.2	)%	 	(11.2	)%	
Total revenue	$	2,450,693		 	$	1,838,070		 	3.8	 %	 	30.8	%	 	(1.3	)%	 	33.3	 %	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
The change in parts and services revenue of 36.8% represents increases of 5.6% in North America, 61.8% in Europe, 18.5% in Specialty, and the addition of Glass segment revenue with the acquisition of PGW in April 2016. The decrease in other revenue of 11.2% primarily consisted of a $21.7 million organic decline in other revenue partially offset by $6.9 million of acquisition related growth. Refer to the discussion of our segment results of operations for factors contributing to revenue changes during the second quarter of 2016 compared to the prior year period.
Cost of Goods Sold . Cost of goods sold increased to 62.4% of revenue in the second quarter of 2016 from 60.6% of revenue in the comparable prior year quarter. The increase in cost of goods sold reflects a negative effect of 1.8% and 0.7% from our PGW and Rhiag acquisitions, respectively, which have lower gross margins than our prior year consolidated gross margin. The increase in cost of goods sold related to PGW includes the impact of a one-time inventory step-up adjustment recorded upon acquisition, which reduced consolidated gross margin for the quarter by 0.4%. In addition, our cost of goods sold increased 0.3% as a result of our Specialty operations and 0.2% as a result of mix, as we generated a greater proportion of our revenue in our Specialty operations, which has lower gross margins than our other segments. Offsetting these negative

42

impacts were decreases in cost of goods sold as a percentage of revenue due to our North America and Europe segments of 0.9% and 0.3%, respectively. The decrease in cost of goods sold as a percentage of revenue in North America reflects gross margin improvement in both our self service operations and our wholesale operations. The decrease in cost of goods sold as a percentage of revenue in Europe is primarily related to our Benelux operations. Refer to the discussion of our segment results of operations for factors contributing to the changes in cost of goods sold as a percentage of revenue by segment for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 .
Facility and Warehouse Expenses . As a percentage of revenue, facility and warehouse expenses for the three months ended June 30, 2016 decreased to 7.3% from 7.4% in the same period of 2015. The change in facilities and warehouse expense reflects decreases of 0.5% and 0.3% from our acquisitions of PGW and Rhiag, respectively, which have lower facility and warehouse expenses as a percentage of revenue than our prior year consolidated facility and warehouse expenses. These decreases were offset by (i) an increase of 0.3% as a percentage of revenue due to costs associated with the opening of new branch and hub locations and the partly operational Tamworth, England distribution center, (ii) a 0.2% increase as a percentage of revenue in our North America operations primarily as a result of a realignment of plant manager responsibilities, which shifted these expenses from selling, general, and administrative expenses to facility and warehouse expenses, and (iii) an increase of 0.2% in Specialty due to the addition of two new distribution facilities and the higher cost of Coast facilities.
Distribution Expenses. As a percentage of revenue, distribution expenses decreased to 7.5% in the second quarter of 2016 from 8.2% in the comparable prior year quarter. The change in distribution expense reflects a positive impact of 0.3% from each of our acquisitions, PGW and Rhiag, which have lower distribution expenses as a percentage of revenue than our prior year consolidated distribution expenses. In addition, distribution expense reflects an increase of 0.3% in freight expenses primarily from our North America operations offset by 0.2% in fuel savings.
Selling, General and Administrative Expenses. Our selling, general and administrative expenses for the three months ended June 30, 2016 decreased to 10.4% of revenue from 11.2% of revenue in the prior year second quarter. The change reflects (i) a 0.6% decrease in expense from our acquisition of PGW, which has lower selling, general and administrative expenses as a percentage of revenue than our prior year consolidated selling, general and administrative expenses and (ii) a decrease of 0.2% in expense from our North America operations due to the realignment previously discussed.
Restructuring and Acquisition Related Expenses . The following table summarizes restructuring and acquisition related expenses for the periods indicated (in thousands):

												
 	Three Months Ended	 	 	
 	June 30,	 	 	
 	2016	 	2015	 	Change	
Restructuring expenses	$	6,051		(1)  	$	937		(2)  	$	5,114		
Acquisition related expenses	3,029		(3)  	726		(4)  	2,303		
Total restructuring and acquisition related expenses	$	9,080		 	$	1,663		 	$	7,417		
		
(1)	Restructuring expenses of $4.6 million, $1.0 million, and $0.5 million for the quarter ended June 30, 2016 were primarily related to the integration of acquired businesses in our Specialty, Europe, and North America segments, respectively. These integration activities included the closure of duplicate facilities and termination of employees.	
		
(2)	Restructuring expenses for the quarter ended June 30, 2015 were primarily related to the integration of acquired businesses in our Specialty segment. These integration activities included the closure of duplicate facilities and termination of employees in connection with the integration of the acquisitions into our existing business.	
		
(3)	Acquisition related expenses for the quarter ended June 30, 2016 included $2.1 million for the acquisition of PGW, $0.4 million for our acquisition of Rhiag, and $0.5 million of external costs related to other potential acquisitions.	
		
(4)	Acquisition related expenses for the second quarter of 2015 were primarily related to our acquisitions of six aftermarket parts distribution businesses in the Netherlands during the second quarter of 2015.	
See Note 4, "Restructuring and Acquisition Related Expenses " to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our restructuring and integration plans.
Depreciation and Amortization . The following table summarizes depreciation and amortization for the periods indicated (in thousands):

43

	
													
 	Three Months Ended	 	 	 	
 	June 30,	 	 	 	
 	2016	 	2015	 	Change	 	
Depreciation	$	28,279		 	$	21,557		 	$	6,722		(1)  	
Amortization	24,250		 	8,225		 	16,025		(2)  	
Total depreciation and amortization	$	52,529		 	$	29,782		 	$	22,747		 	
		
(1)	The increase in depreciation expense primarily reflects depreciation expense for property, plant and equipment recorded related to our acquisitions of Rhiag and PGW of $3.5 million and $1.0 million, respectively. The remaining change reflects increased levels of property and equipment to support our organic related growth.	
		
(2)	The increase in amortization expense primarily reflects amortization expense for intangible assets recorded related to our acquisitions of Rhiag and PGW of $14.9 million and $1.8 million, respectively.	
Other Expense, Net. The following table summarizes the components of the quarter-over-quarter increase in other expense, net (in thousands):

						
Other expense, net for the three months ended June 30, 2015	$	14,719		 	
Increase due to:	 	 	
Interest expense, net	11,759		(1)  	
Other income, net	1,242		 	
Net increase	13,001		 	
Other expense, net for the three months ended June 30, 2016	$	27,720		 	
		
(1)	Additional interest primarily relates to borrowings used to fund the acquisitions of Rhiag and PGW.	
Provision for Income Taxes . Our effective income tax rate was 34.8% for the three months ended June 30, 2016 , compared to 34.9% for the three months ended June 30, 2015 . The lower effective income tax rate for the three months ended June 30, 2016 reflects our expected geographic distribution of income, with a slightly larger proportion of our pre-tax income expected to be earned in the typically lower tax rate international jurisdictions. The discrete tax items for the three months ended June 30, 2016 and June 30, 2015 were immaterial.
Equity in Earnings of Unconsolidated Subsidiaries. In February 2016, we divested our interest in ACM Parts. We obtained ownership interests in three joint ventures, including glass manufacturing operations in China and Mexico, in April 2016 as part of our acquisition of PGW. Our equity in the net earnings of the investees was not material for the three months ended June 30, 2016.
Foreign Currency Impact . We translate our statements of income at the average exchange rates in effect for the period. Relative to the rates used during the second quarter of 2015, the pound sterling and Canadian dollar rates used to translate the 2016 statements of income declined by 6.3% and 4.6%, respectively, while the euro increased by 2.1%. The translation effect of the change of these currencies against the U.S. dollar and realized and unrealized currency losses for the quarter resulted in a $0.01 negative effect on diluted earnings per share relative to the prior year.
Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015
Revenue. The following table summarizes the changes in revenue by category (in thousands):

																				
 	Six Months Ended	 	 	 	 	 	 	 	 	
 	June 30,	 	Percentage Change in Revenue	
 	2016	 	2015	 	Organic	 	Acquisition	 	Foreign Exchange	 	Total Change	
Parts & services revenue	$	4,150,314		 	$	3,349,264		 	5.8	 %	 	19.7	%	 	(1.6	)%	 	23.9	 %	
Other revenue	221,855		 	262,718		 	(20.6	)%	 	5.2	%	 	(0.2	)%	 	(15.6	)%	
Total revenue	$	4,372,169		 	$	3,611,982		 	3.9	 %	 	18.6	%	 	(1.5	)%	 	21.0	 %	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	

44

The change in parts and services revenue of 23.9% represents increases of 6.4% in North America, 37.6% in Europe, 19.0% in Specialty, and the addition of Glass segment revenue with the acquisition of PGW in April 2016. The decrease in other revenue of 15.6% reflects lower prices received from the sale of scrap steel and other metals as well as fewer vehicles being processed than in the prior year period. Refer to the discussion of our segment results of operations for factors contributing to revenue changes during the six months ended June 30, 2016 compared to the prior year period.
Cost of Goods Sold . Our cost of goods sold increased to 61.5% of revenue in the six months ended June 30, 2016 from 60.6% of revenue in the comparable prior year period. The increase in cost of goods sold reflects a negative effect of 1.0% and 0.4% from our PGW and Rhiag acquisitions, respectively, which have lower gross margins than our prior year consolidated gross margin. The increase in cost of goods sold related to PGW includes the impact of a one-time inventory step-up adjustment recorded upon acquisition, which reduced consolidated gross margin for the quarter by 0.2%. This negative impact was partially offset by lower cost of goods sold as a percentage of revenue of 0.5% related to our North America segment, primarily in our self service operations. Refer to the discussion of our segment results of operations for factors contributing to the changes in cost of goods sold as a percentage of revenue by segment for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 .
Facility and Warehouse Expenses . As a percentage of revenue, facility and warehouse expenses for the six months ended June 30, 2016 increased to 7.7% from 7.4% in the prior year period. The change in facilities and warehouse expense reflects (i) a 0.4% increase as a percentage of revenue in our North America operations primarily as a result of a realignment of plant manager responsibilities, which shifted these expenses from selling, general and administrative expenses to facility and warehouse expenses and (ii) a 0.3 % increase as a percentage of revenue in our Europe operations for branch openings and the addition of facility costs for the partly operational Tamworth, England distribution center. These negative impacts were partially offset by decreases of 0.3% and 0.2% from our acquisitions of PGW and Rhiag, respectively, which have lower operating expenses as a percentage of revenue than our prior year consolidated facility and warehouse expense s.
Distribution Expenses. As a percentage of revenue, distribution expenses decreased to 7.7% in the six months ended June 30, 2016 from 8.1% in the comparable prior year period. The decrease primarily relates to improvements of 0.2% and 0.1% from our acquisitions of Rhiag and PGW, respectively, which have lower distribution expenses than our prior year consolidated distribution expenses. In addition, distribution expense reflects an increase of 0.3% in freight expenses primarily from our North America operations offset by 0.2% in fuel savings.
Selling, General and Administrative Expenses. Our selling, general and administrative expenses for the six months ended June 30, 2016 decreased to 10.8% of revenue from 11.3% of revenue in the prior year period. The decrease relates to an improvement of 0.3% from our acquisition of PGW, which has lower selling, general, and administrative expenses than our prior year consolidated selling, general and administrative expenses. The remaining change comes from our North America segment as a result of the realignment discussed above.
Restructuring and Acquisition Related Expenses . The following table summarizes restructuring and acquisition related expenses for the periods indicated (in thousands):

												
 	Six Months Ended	 	 	
 	June 30,	 	 	
 	2016	 	2015	 	Change	
Restructuring expenses	$	8,187		(1)  	$	6,901		(2)  	$	1,286		
Acquisition related expenses	15,704		(3)  	1,250		(4)  	14,454		
Total restructuring and acquisition related expenses	$	23,891		 	$	8,151		 	$	15,740		
		
(1)	Restructuring expenses of $6.1 million, $1.2 million, and $0.9 million for the six months ended June 30, 2016 related to the integration of acquired businesses in our Specialty, North America, and Europe segments, respectively. These integration activities included the closure of duplicate facilities and termination of employees.	
		
(2)	Restructuring expenses for the six months ended June 30, 2015 primarily related to the integration of acquired businesses in our Specialty segment. These integration activities included the closure of duplicate facilities and termination of employees in connection with the integration of the acquisitions into our existing business.	
		
(3)	Acquisition related expenses of $15.7 million for the six months ended June 30, 2016 reflect $11.0 million and $3.9 million related to the acquisitions of Rhiag and PGW, respectively. The remaining expense was related to other completed and potential acquisitions.	

45

		
(4)	Acquisition related expenses for the six months ended June 30, 2015 included $0.9 million of external costs related to our acquisitions of seven aftermarket parts distribution businesses in the Netherlands during the first half of 2015. The remaining restructuring expenses were external costs primarily related to potential acquisitions.	
See Note 4, "Restructuring and Acquisition Related Expenses " to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our restructuring and integration plans.
Depreciation and Amortization . The following table summarizes depreciation and amortization for the periods indicated (in thousands):

													
 	Six Months Ended	 	 	 	
 	June 30,	 	 	 	
 	2016	 	2015	 	Change	 	
Depreciation	$	51,066		 	$	42,739		 	$	8,327		(1)  	
Amortization	33,151		 	16,496		 	16,655		(2)  	
Total depreciation and amortization	$	84,217		 	$	59,235		 	$	24,982		 	
		
(1)	The increase in depreciation expense primarily reflects depreciation expense for property, plant and equipment recorded related to our acquisitions of Rhiag and PGW of $3.8 million and $1.0 million, respectively. The remaining change reflects increased levels of property and equipment to support our organic related growth.	
		
(2)	The increase in amortization expense primarily reflects amortization expense for intangible assets recorded related to our acquisitions of Rhiag and PGW of $16.1 million and $1.8 million, respectively. These increases are offset by a decline in accelerated amortization for intangibles recognized in previous years.	
Other Expense, Net. The following table summarizes the components of the year-over-year increase in other expense, net (in thousands):

						
Other expense, net for the six months ended June 30, 2015	$	31,544		 	
Increase (Decrease) due to:	 	 	
Interest expense, net	11,445		(1)  	
Loss on debt extinguishment	26,650		(2)  	
Gains on foreign exchange contracts - acquisition related	(18,342	)	(3)  	
Other income, net	(3,566	)	(4)  	
Net increase	16,187		 	
Other expense, net for the six months ended June 30, 2016	$	47,731		 	
		
(1)	Additional interest primarily relates to borrowings used to fund the acquisitions of Rhiag and PGW.	
		
(2)	During the first quarter of 2016, we incurred a $23.8 million loss on debt extinguishment as a result of our early payment of Rhiag debt assumed as part of the acquisition, and we incurred a $2.9 million loss on debt extinguishment as a result of our January 2016 amendment to our senior secured credit agreement.	
		
(3)	In March 2016, we entered into foreign currency forward contracts to acquire a total of €588 million used to fund the purchase price of the Rhiag acquisition. The rates under the foreign currency forwards were favorable to the spot rate on March 17, 2016, and as result, these derivatives contracts generated a gain of $18.3 million.	
		
(4)	The change in Other income, net primarily reflects the impact of foreign currency transaction gains and losses, which was a net $1.9 million favorable impact compared to the prior year period. This includes unrealized gains and losses on foreign currency transactions and unrealized mark-to-market gains and losses on foreign currency forward contracts used to hedge the purchase of inventory in our U.K. operations. The remaining change relates to miscellaneous other income.	
Provision for Income Taxes . Our effective income tax rate was 34.8% for the six months ended June 30, 2016 , compared to 35.2% for the six months ended June 30, 2015 . The lower effective income tax rate for the six months ended June 30, 2016 is primarily a result of our expected geographic distribution of income. The discrete tax items for the six months ended June 30, 2016 and June 30, 2015 were immaterial.

46

Equity in Earnings of Unconsolidated Subsidiaries. In February 2016, we divested our interest in ACM Parts. We obtained ownership interests in three joint ventures, including glass manufacturing operations in China and Mexico, in the second quarter as part of our acquisition of PGW. Our equity in the net earnings of the investees was not material for the six months ended June 30, 2016.
Foreign Currency Impact . We translate our statements of income at the average exchange rates in effect for the period. Relative to the rates used for the first half of 2015, the pound sterling and Canadian dollar rates used to translate the 2016 statements of income declined by 5.9%, and 7.1%, respectively. The euro remained flat relative to the first half of 2016. The translation effect of the decline of these currencies against the U.S. dollar and realized and unrealized currency losses in the first half of 2016 resulted in an approximately $0.015 negative effect on diluted earnings per share relative to the prior year period.

Results of Operations—Segment Reporting
We have five operating segments: Wholesale – North America; Europe; Specialty; Glass; and Self Service. The Glass segment was created as part of our acquisition of PGW as the business possesses different economic characteristics and has different products and services, customers, and methods of distribution. Our Wholesale – North America and Self Service operating segments are aggregated into one reportable segment, North America, because they possess similar economic characteristics and have common products and services, customers, and methods of distribution. Therefore, we present four reportable segments: North America, Europe, Specialty and Glass.
We evaluate growth and profitability in our operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our growth and profitability, consistent with how we evaluate our performance, as this statistic removes the translation impact of exchange rate fluctuations, which is non-operational. Constant currency Segment EBITDA results are calculated by translating prior year Segment EBITDA in local currency using the current year's currency conversion rate. This non-GAAP measure has important limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Our use of this term may vary from the use of similarly-titled measures by other companies due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.
The following table presents our financial performance, including third party revenue, total revenue and Segment EBITDA, by reportable segment for the periods indicated (in thousands):

47

 

																								
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2016	 	% of Total Segment Revenue	 	2015	 	% of Total Segment Revenue	 	2016	 	% of Total Segment Revenue	 	2015	 	% of Total Segment Revenue	
Third Party Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
North America	$	1,080,401		 	 	 	$	1,044,779		 	 	 	$	2,167,764		 	 	 	$	2,090,858		 	 	
Europe	824,216		 	 	 	509,833		 	 	 	1,370,967		 	 	 	997,179		 	 	
Specialty	335,972		 	 	 	283,458		 	 	 	623,334		 	 	 	523,945		 	 	
Glass	210,104		 	 	 	—		 	 	 	210,104		 	 	 	—		 	 	
Total third party revenue	$	2,450,693		 	 	 	$	1,838,070		 	 	 	$	4,372,169		 	 	 	$	3,611,982		 	 	
Total Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
North America	$	1,080,520		 	 	 	$	1,045,151		 	 	 	$	2,168,097		 	 	 	$	2,091,324		 	 	
Europe	824,206		 	 	 	509,903		 	 	 	1,370,967		 	 	 	997,249		 	 	
Specialty	337,066		 	 	 	284,330		 	 	 	625,379		 	 	 	525,552		 	 	
Glass	210,178		 	 	 	—		 	 	 	210,178		 	 	 	—		 	 	
Eliminations	(1,277	)	 	 	 	(1,314	)	 	 	 	(2,452	)	 	 	 	(2,143	)	 	 	
Total revenue	$	2,450,693		 	 	 	$	1,838,070		 	 	 	$	4,372,169		 	 	 	$	3,611,982		 	 	
Segment EBITDA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
North America	$	163,825		 	15.2%	 	$	138,880		 	13.3%	 	$	311,200		 	14.4%	 	$	288,268		 	13.8%	
Europe	89,982		 	10.9%	 	53,943		 	10.6%	 	147,480		 	10.8%	 	100,466		 	10.1%	
Specialty	41,792		 	12.4%	 	40,198		 	14.1%	 	73,530		 	11.8%	 	65,602		 	12.5%	
Glass	23,301		 	11.1%	 	—		 	n/m	 	23,301		 	11.1%	 	—		 	n/m	
Total Segment EBITDA	$	318,900		 	13.0%	 	$	233,021		 	12.7%	 	$	555,511		 	12.7%	 	$	454,336		 	12.6%	
The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. Segment EBITDA is calculated as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other acquisition related gains and losses and equity in earnings of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding depreciation, amortization, interest (including loss on debt extinguishment) and taxes. Loss on debt extinguishment is considered a component of interest in calculating EBITDA. See Note 13, "Segment and Geographic Information " to the unaudited condensed consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q for a reconciliation of total Segment EBITDA to Net Income.
Because our Glass segment was formed on April 21, 2016 with our PGW acquisition, the discussion of our consolidated results of operations covers the factors driving the year-over-year performance of our existing business and also discusses the effect of the Glass operations on our consolidated results. Results for the Glass segment will not have a comparative period until the second quarter of 2017. However, compared to its unaudited results for the first half of 2015, PGW's revenue was relatively flat with an increase in OEM sales offset by a decline in ARG sales due to challenging market conditions, primarily due to the impact of milder winter weather conditions.

48

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015
North America
Third Party Revenue . The following table summarizes the changes in third party revenue by category in our North America segment (in thousands):

																				
 	Three Months Ended June 30,	 	Percentage Change in Revenue	
North America	2016	 	2015	 	Organic	 	Acquisition (3)	 	Foreign Exchange (4)	 	Total Change	
Parts & services revenue	$	962,954		 	$	912,159		 	3.1	 %	(1)  	2.8	%	 	(0.3	)%	 	5.6	 %	
Other revenue	117,447		 	132,620		 	(16.3	)%	(2)  	5.0	%	 	(0.2	)%	 	(11.4	)%	
Total third party revenue	$	1,080,401		 	$	1,044,779		 	0.6	 %	 	3.1	%	 	(0.3	)%	 	3.4	 %	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	Organic growth in parts and services revenue was predominantly attributable to pricing in our wholesale operations. In addition, revenue grew as we generated higher sales volumes in our salvage operations in the second quarter of 2016 compared to the same period in 2015. The volume increase was offset by a negative mix impact as we saw a smaller percentage of sales from high value salvage part types in 2016. Aftermarket sales volumes were flat quarter over quarter as we believe milder winter weather conditions in North America in the first quarter of 2016 negatively impacted collision part sales into the second quarter. Sales volumes in the first half of the second quarter are typically influenced by accident activity in the winter months, and the milder conditions reduced the backlog at repair shops relative to the same period in the prior year.	
		
(2)	The $15 million decrease in other revenue related primarily to (i) a $7 million reduction due to the sale of our precious metals business late in the second quarter of 2015 and (ii) a $7 million decline in revenue from metals, such as those found in catalytic converters (platinum, palladium and rhodium), aluminum wheels and copper wiring, all due to lower prices year over year.	
		
(3)	The acquired revenue growth reflects the impact of our acquisition of three wholesale businesses and one self service retail operation acquired since the beginning of the second quarter of 2015 up to the one year anniversary of the acquisition date.	
		
(4)	Compared to the prior year, exchange rates reduced our revenue growth by 0.3%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the second quarter 2016 compared to the prior year second quarter.	
Segment EBITDA . Segment EBITDA increased $24.9 million, or 18.0%, in the second quarter of 2016 compared to the prior year second quarter. While other revenue for the second quarter of 2016 decreased from the prior year period, increases in sequential scrap steel prices in our salvage and self service operations benefited gross margins and had a favorable impact of $10.6 million on North America Segment EBITDA and a $0.02 positive effect on diluted earnings per share during the second quarter of 2016. This favorable impact results from the increase in scrap steel prices between the date we purchased the car, which influences the price we pay for the car, and the date we scrap the car, which influences the price we receive for scrapping the vehicle.
The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our North America segment:

					
North America	 	Percentage of Total Segment Revenue	 	
Segment EBITDA for the three months ended June 30, 2015	 	13.3	 %	 	
Increase (decrease) due to:	 	 	 	
Change in gross margin	 	1.7	 %	(1)	
Change in segment operating expenses	 	0.3	 %	(2)	
Change in other expense, net	 	(0.1	)%	 	
Segment EBITDA for the three months ended June 30, 2016	 	15.2	 %	 	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	

49

		
(1)	The improvement in gross margin reflects a 1.1% favorable impact from our self service operations, as well as a favorable impact of 0.6% from our wholesale operations. Gross margins at our self service operations improved as car costs have decreased by a greater percentage year over year than revenue. We experienced a 0.4% favorable impact on gross margin as a result of procurement initiatives implemented in our aftermarket operations during 2016, which reduced our product costs. Aftermarket gross margins also improved as a result of a favorable price impact as mentioned in the third party revenue discussion above.	
		
(2)	The decline in segment operating expenses as a percentage of revenue was primarily due to a 0.2% improvement in facility costs as a percentage of revenue and a 0.2% improvement in fuel costs as a percentage of revenue, partially offset by a 0.3% increase in freight costs as a percentage of revenue. The remaining reduction in segment operating expenses as a percentage of revenue was attributable to a number of individually insignificant decreases across various operating expense categories.	
Europe
Third Party Revenue . The following table summarizes the changes in third party revenue by category in our Europe segment (in thousands):

																				
 	Three Months Ended June 30,	 	Percentage Change in Revenue	
Europe	2016	 	2015	 	Organic (1)	 	Acquisition (2)	 	Foreign Exchange (3)	 	Total Change	
Parts & services revenue	$	822,959		 	$	508,731		 	8.0	 %	 	57.5	%	 	(3.7	)%	 	61.8	%	
Other revenue	1,257		 	1,102		 	(4.9	)%	 	21.6	%	 	(2.6	)%	 	14.1	%	
Total third party revenue	$	824,216		 	$	509,833		 	8.0	 %	 	57.4	%	 	(3.7	)%	 	61.7	%	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	In our U.K. operations, parts and services revenue grew organically by 9.6%, while in our Benelux region operations, parts and services revenue grew organically by 4.4%. Our organic revenue growth in the U.K. operations, which primarily resulted from higher sales volumes, was composed of a 7.8% increase in revenue from stores open more than 12 months, a 1.8% increase from revenue generated by 14 branch openings since the second quarter of the prior year through the one year anniversary of their respective opening dates, and two additional selling days in the second quarter of 2016 compared to the prior year quarter. Organic revenue growth in our Benelux operations was primarily due to two additional selling days in the second quarter of 2016 compared to the prior year quarter.	
		
(2)	Acquisition related growth for the second quarter of 2016 includes $284.3 million from our acquisition of Rhiag. The remainder of our acquired revenue growth reflects our acquisition of 12 distribution companies in the Netherlands and 2 salvage businesses in Sweden acquired since the beginning of the second quarter of 2015 up to the one year anniversary of the acquisition date.	
		
(3)	Compared to the prior year quarter, exchange rates reduced our revenue growth by $19.0 million, or 3.7%, primarily due to the strengthening of the U.S. dollar against the pound sterling in the second quarter of 2016, partially offset by the weakening of the U.S. dollar against the euro in the second quarter of 2016.	
Segment EBITDA. Segment EBITDA increased $36.0 million, or 66.8%, in the second quarter of 2016 compared to the prior year second quarter. Our Europe Segment EBITDA includes a negative year over year impact of $2.3 million related to the translation of local currency results into U.S. dollars at lower exchange rates than those experienced during 2015. On a constant currency basis (i.e. excluding the translation impact), Segment EBITDA increased by $38.3 million, or 71.0%, compared to the prior year. Refer to the Foreign Currency Impact discussion within the Results of Operations - Consolidated section above for further detail regarding foreign currency impact on our results for the three months ended June 30, 2016.
The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our Europe segment:

50

	
					
Europe	 	Percentage of Total Segment Revenue	 	
Segment EBITDA for the three months ended June 30, 2015	 	10.6	 %	 	
(Decrease) increase due to:	 	 	 	
Change in gross margin	 	(0.5	)%	(1)	
Change in segment operating expenses	 	0.7	 %	(2)	
Change in other expense, net	 	0.1	 %	 	
Segment EBITDA for the three months ended June 30, 2016	 	10.9	 %	 	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	The decrease in gross margin is primarily due to a 1.5% decline in gross margins as a result of the acquisition of Rhiag, which has lower gross margins than our other Europe operations. This decrease was partially offset by a 1.0% increase related to our Benelux operations primarily as a result of internalizing incremental gross margin from our 2015 acquisitions of 11 Netherlands distributors and the introduction of new product lines with higher margins than our existing product line sales.	
		
(2)	The decrease in segment operating expenses as a percentage of revenue reflects (i) a 1.7% decrease related to the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our existing Europe operations and (ii) a decrease of 0.4% in selling, general, and administrative expenses from our U.K. operations due to an increase in operating leverage. These decreases are partially offset by (i) an increase in facility and warehouse expenses of 1.1% primarily from our U.K. operations due to increases from opening 14 new branches and 4 new hubs since the beginning of the prior year second quarter as well as the addition of facility and personnel costs for the newly operating Tamworth distribution facility and (ii) an increase of 0.3% in facility and warehouse personnel expenses from our Benelux operations primarily related to the introduction of new product lines.	
Specialty
Third Party Revenue . The following table summarizes the changes in third party revenue by category in our Specialty segment (in thousands):

																				
 	Three Months Ended June 30,	 	Percentage Change in Revenue	
Specialty	2016	 	2015	 	Organic (1)	 	Acquisition (2)	 	Foreign Exchange (3)	 	Total Change	
Parts & services revenue	$	335,972		 	$	283,458		 	8.0	%	 	11.1	%	 	(0.5	)%	 	18.5	%	
Other revenue	—		 	—		 	—	%	 	—	%	 	—	 %	 	—	%	
Total third party revenue	$	335,972		 	$	283,458		 	8.0	%	 	11.1	%	 	(0.5	)%	 	18.5	%	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	Organic growth in Specialty parts and services revenue reflects an increase in service levels in various regions of North America as we expand the breadth and depth of our inventory offerings and add delivery capacity to our integrated distribution network to allow us to realize synergies associated with the integration of Coast. In addition, we continue to see growth from favorable macro trends and economic conditions, which has increased consumer discretionary spending on automotive and recreational vehicle ("RV") parts and accessories.	
		
(2)	Acquisition related growth reflects the impact of the acquisition of Coast on August 19, 2015.	
		
(3)	Compared to the prior year, exchange rates reduced our revenue growth by 0.5%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the second quarter 2016 compared to the prior year second quarter.	
Segment EBITDA. Segment EBITDA increased $1.6 million, or 4.0%, in the second quarter of 2016 compared to the prior year second quarter.
The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our Specialty segment:

51

	
					
Specialty	 	Percentage of Total Segment Revenue	 	
Segment EBITDA for the three months ended June 30, 2015	 	14.1	 %	 	
(Decrease) increase due to:	 	 	 	
Change in gross margin	 	(1.6	)%	(1)	
Change in segment operating expenses	 	(0.3	)%	(2)	
Change in other expense, net	 	0.2	 %	 	
Segment EBITDA for the three months ended June 30, 2016	 	12.4	 %	 	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	The decline in gross margin reflects (i) a 0.9% increase in inventory costs, which were higher due to the stocking of two distribution centers in the second quarter of 2016 which were not yet operational in the prior year period, (ii) 0.7% of unfavorable gross margin impact due to customer volume rebate adjustments which have increased along with sales volumes, and (iii) a 0.3% net negative impact from the timing of recognizing certain advertising credits in comparison to the prior year quarter, offset by (iv) a 0.2% favorable impact due to product mix with a continued shift to higher gross margin products sold, primarily truck and off road products.	
		
(2)	The increase in segment operating expenses reflects an increase in facilities and warehouse expense of 0.9% from the addition of two distribution facilities in late 2015 and the higher cost of Coast facilities in comparison to our existing business. These negative effects were partially offset by a 0.4% reduction in selling, general and administrative expenses as a percentage of revenue primarily due to realization of acquisition related synergies and 0 .2% improvement in distribution expenses primarily related to the impact of lower fuel rates and lower rental and maintenance costs.	
Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015
North America
Third Party Revenue . The following table summarizes the changes in third party revenue by category in our North America segment (in thousands):

																				
 	Six Months Ended June 30,	 	Percentage Change in Revenue	
North America	2016	 	2015	 	Organic	 	Acquisition (3)	 	Foreign Exchange (4)	 	Total Change	
Parts & services revenue	$	1,948,210		 	$	1,830,492		 	4.0	 %	(1)  	3.0	%	 	(0.5	)%	 	6.4	 %	
Other revenue	219,554		 	260,366		 	(20.6	)%	(2)  	5.1	%	 	(0.2	)%	 	(15.7	)%	
Total third party revenue	$	2,167,764		 	$	2,090,858		 	0.9	 %	 	3.2	%	 	(0.5	)%	 	3.7	 %	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	Organic growth in parts and services revenue was attributable to similar changes in volume and price. Sales volumes increased in our wholesale operations resulting from improved fill rates and in-stock rates, as well as increased purchasing levels, which contributed to a greater volume of parts available for sale. Organic revenue growth in parts and services was negatively affected by milder winter weather conditions in North America in the first quarter of 2016. Organic revenue also grew due to increased prices in our wholesale operations, primarily in our salvage operations as a result of shifting our salvage vehicle purchasing to higher quality vehicles, which raised the average revenue per part sold. The organic growth was partially offset by a negative mix impact as we saw a smaller percentage of sales from high value salvage part types in 2016.	
		
(2)	The $41 million decrease in other revenue related primarily to (i) a $15 million decline in revenue from metals, such as those found in catalytic converters (platinum, palladium and rhodium), aluminum wheels and copper wiring, all due to lower prices year over year, (ii) a $13 million reduction due to the sale of our precious metals business late in the second quarter of 2015, and (iii) a $13 million decline in revenue from scrap steel and other metals primarily related to lower scrap steel prices partially offset by higher volumes processed in 2016.	
		
(3)	The acquired revenue growth reflects the impact of our acquisition of four wholesale businesses and one self service retail operation acquired since the beginning of 2015 up to the one year anniversary of the acquisition date.	
		
(4)	Compared to the prior year, exchange rates reduced our revenue growth by 0.5%, primarily due to the strengthening of the U.S. dollar against the Canadian dollar in the first half of 2016 compared to the prior year period.	

52

Segment EBITDA . Segment EBITDA increased $22.9 million, or 8.0%, in the first half of 2016 compared to the prior year period. While other revenue for the first half of 2016 decreased from the prior year period, increases in sequential scrap steel prices in our salvage and self service operations benefited gross margins and had a favorable impact of $8.8 million on North America Segment EBITDA and approximately a $0.02 positive effect on diluted earnings per share. This favorable impact results from the increase in scrap steel prices between the date we purchased the car, which influences the price we pay for the car, and the date we scrap the car, which influences the price we receive for scrapping the vehicle.
The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our North America segment:

					
North America	 	Percentage of Total Segment Revenue	 	
Segment EBITDA for the six months ended June 30, 2015	 	13.8	 %	 	
Increase (decrease) due to:	 	 	 	
Change in gross margin	 	0.8	 %	(1)	
Change in segment operating expenses	 	(0.4	)%	(2)	
Change in other income	 	0.2	 %	 	
Segment EBITDA for the six months ended June 30, 2016	 	14.4	 %	 	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	The improvement in gross margin primarily reflects a 0.8% favorable impact from our self service operations. Gross margins at our self service operations have improved as car costs have decreased by a greater percentage year over year than revenue.	
		
(2)	The increase in segment operating expenses as a percentage of revenue was primarily the result of a 0.4% increase in personnel costs as a percentage of revenue. Further contributing to the increase in operating expenses was a 0.2% increase in freight costs as a percentage of revenue, partially offset by a 0.2% improvement in fuel prices.	
Europe
Third Party Revenue . The following table summarizes the changes in third party revenue by category in our Europe segment (in thousands):

																				
 	Six Months Ended June 30,	 	Percentage Change in Revenue	
Europe	2016	 	2015	 	Organic (1)	 	Acquisition (2)	 	Foreign Exchange (3)	 	Total Change	
Parts & services revenue	$	1,368,666		 	$	994,827		 	7.5	 %	 	34.2	%	 	(4.1	)%	 	37.6	 %	
Other revenue	2,301		 	2,352		 	(14.2	)%	 	15.6	%	 	(3.6	)%	 	(2.1	)%	
Total third party revenue	$	1,370,967		 	$	997,179		 	7.4	 %	 	34.2	%	 	(4.1	)%	 	37.5	 %	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	In our U.K. operations, parts and services revenue grew organically by 8.5%, while in our Benelux region operations, parts and services revenue grew organically by 5.2%. Our organic revenue growth in the U.K., which primarily resulted from higher sales volumes, was composed of an 6.8% increase in revenue from stores open more than 12 months, a 1.6% increase from revenue generated by 14 branch openings since the second quarter of the prior year through the one year anniversary of their respective opening dates. Organic revenue growth in parts and services in our U.K. operations was negatively affected by milder winter weather conditions in the U.K. in the first quarter of 2016. Organic revenue growth in our Benelux operations was primarily due to higher sales volumes as a result of the introduction of new product lines and two additional selling days in the first half of 2016 compared to the prior year period.	
		
(2)	Acquisition related growth for the first half of 2016 includes $318.1 million from our acquisition of Rhiag. The remainder of our acquired revenue growth reflects our acquisition of 12 distribution companies in the Netherlands and 2 salvage businesses in Sweden acquired since the beginning of 2015 up to the one year anniversary of the acquisition date.	
		
(3)	Compared to the prior year, exchange rates reduced our revenue growth by $41.0 million, or 4.1%, primarily due to the strengthening of the U.S. dollar against the pound sterling relative to the first half of 2015.	

53

Segment EBITDA. Segment EBITDA increased $47.0 million, or 46.8%, in the first half of 2016 compared to the prior year period. Our Europe Segment EBITDA includes a negative year over year impact of $4.5 million related to the translation of local currency results into U.S. dollars at lower exchange rates than those experienced during 2015. On a constant currency basis (i.e. excluding the translation impact), Segment EBITDA increased by $51.5 million, or 51.3%, compared to the prior year. Refer to the Foreign Currency Impact discussion within the Results of Operations - Consolidated section above for further detail regarding foreign currency impact on our results for the six months ended June 30, 2016.
The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our Europe segment:

					
Europe	 	Percentage of Total Segment Revenue	 	
Segment EBITDA for the six months ended June 30, 2015	 	10.1	%	 	
Increase due to:	 	 	 	
Change in gross margin	 	0.1	%	(1)	
Change in segment operating expenses	 	0.2	%	(2)	
Change in other expense, net	 	0.4	%	(3)	
Segment EBITDA for the six months ended June 30, 2016	 	10.8	%	 	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	The increase in gross margin reflects improvement of (i) 0.8% related to our Benelux operations primarily as a result of internalizing incremental gross margin from our 2015 acquisitions of 11 Netherlands distributors and the introduction of new product lines with higher margins than our existing product line sales and (ii) 0.3% related to our U.K. operations, primarily as a result of a reduction in product costs. The increase in gross margin from our U.K. and Benelux operations was partially offset by a 0.9% decline in gross margin due to the acquisition of Rhiag, which has lower gross margins than our other Europe operations.	
		
(2)	The decrease in segment operating expenses as a percentage of revenue reflects (i) a decrease of 1.1% in operating expenses as a result of the acquisition of Rhiag, which has lower operating expenses as a percentage of revenue than our existing Europe operations and (ii) an increase in facility and warehouse expenses of 0.9% from our U.K. operations due to increases from opening 14 new branches and 4 new hubs since the prior year second quarter as well as the addition of facility and personnel costs for the Tamworth distribution facility.	
		
(3)	The decrease in other expense, net is a result of gains on foreign currency forward contracts used to manage the foreign currency exposure on inventory purchases in our U.K. operations.	
Specialty
Third Party Revenue . The following table summarizes the changes in third party revenue by category in our Specialty segment (in thousands):

																				
 	Six Months Ended June 30,	 	Percentage Change in Revenue	
Specialty	2016	 	2015	 	Organic (1)	 	Acquisition (2)	 	Foreign Exchange (3)	 	Total Change	
Parts & services revenue	$	623,334		 	$	523,945		 	9.3	%	 	10.3	%	 	(0.6	)%	 	19.0	%	
Other revenue	—		 	—		 	—	%	 	—	%	 	—	 %	 	—	%	
Total third party revenue	$	623,334		 	$	523,945		 	9.3	%	 	10.3	%	 	(0.6	)%	 	19.0	%	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	Organic growth in Specialty parts and services revenue reflects an increase in service levels in various regions of North America as we expand the breadth and depth of our inventory offerings and add delivery capacity to our integrated distribution network to allow us to realize synergies associated with the integration of Coast. In addition, we continue to see growth from favorable macro trends and economic conditions, which has increased consumer discretionary spending on automotive and RV parts and accessories.	
		
(2)	Acquisition related growth reflects the impact of the acquisition of Coast on August 19, 2015.	
		
(3)	Compared to the prior year, exchange rates reduced our revenue growth by 0.6%, primarily due to the strengthening U.S. dollar against the Canadian dollar in the first half of 2016 compared to the first half of 2015.	

54

Segment EBITDA. Segment EBITDA increased $7.9 million, or 12.1%, in the first half of 2016 compared to the comparative period in the prior year.
The following table summarizes the changes in Segment EBITDA as a percentage of revenue in our Specialty segment:

					
Specialty	 	Percentage of Total Segment Revenue	 	
Segment EBITDA for the six months ended June 30, 2015	 	12.5	 %	 	
(Decrease) increase due to:	 	 	 	
Change in gross margin	 	(0.8	)%	(1)	
Change in segment operating expenses	 	(0.1	)%	(2)	
Change in other expense, net	 	0.2	 %	 	
Segment EBITDA for the six months ended June 30, 2016	 	11.8	 %	 	
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.	
		
(1)	The decline in gross margin reflects (i) a 0.5% increase in inventory costs, which were higher due to the stocking of two distribution centers in the second quarter of 2016 which were not yet operational in the prior year period, and (ii) a 0.6% unfavorable margin impact due to customer volume rebate adjustments which have increased along with sales volume . These negative effects were partially offset by a 0.3% favorable mix effect resulting from a shift toward higher margin products, particularly truck and off road products.	
		
(2)	The increase in segment operating expenses reflects an increase in facilities and warehouse expense of 0.8% from the addition of two distribution facilities in late 2015 and the higher cost of Coast facilities in comparison to our existing business. These negative effects were offset by 0.7% reduction in selling, general and administrative expenses primarily related to (i) a 0.3% decline in personnel costs for the realization of integration synergies and (ii) individually insignificant decreases across various selling, general and administrative expense categories totaling 0.4%.	

Liquidity and Capital Resources
The following table summarizes liquidity data as of the dates indicated (in thousands):

												
 	June 30, 2016	 	December 31, 2015	 	June 30, 2015	
Cash and equivalents	$	273,203		 	$	87,397		 	$	143,423		
Total debt (1)	3,361,684		 	1,599,695		 	1,691,442		
Net debt (total debt less cash and equivalents)	3,088,481		 	1,512,298		 	1,548,019		
Current maturities (2)	63,130		 	57,494		 	39,378		
Capacity under credit facilities (3)	2,547,000		 	1,947,000		 	1,947,000		
Availability under credit facilities (3)	1,088,846		 	1,337,653		 	1,238,780		
Total liquidity (cash and equivalents plus availability under credit facilities)	1,362,049		 	1,425,050		 	1,382,203		
(1) Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of $26.2 million, $15.0 million, and $16.7 million as of June 30, 2016, December 31, 2015 and June 30, 2015, respectively).
(2) Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of $2.3 million, $1.5 million and $1.5 million as of June 30, 2016, December 31, 2015 and June 30, 2015, respectively).
(3) Includes our revolving credit facilities, our receivables securitization facility, and letters of credit.
We assess our liquidity in terms of our ability to fund our operations and provide for expansion through both internal development and acquisitions. Our primary sources of liquidity are cash flows from operations and our credit facilities. We utilize our cash flows from operations to fund working capital and capital expenditures, with the excess amounts going towards funding acquisitions or paying down outstanding debt. As we have pursued acquisitions as part of our growth strategy, our cash flows from operations have not always been sufficient to cover our investing activities. To fund our acquisitions, we have

55

accessed various forms of debt financing, including our January 2016 amendment to our senior secured credit facilities, our receivables securitization facility and the issuance of €500 million of senior notes in April 2016 by LKQ Italia Bondco S.p.A., an indirect, wholly-owned subsidiary of LKQ Corporation.
As of June 30, 2016 , we had debt outstanding and additional available sources of financing as follows:
		
•	Senior secured credit facilities maturing in January 2021, composed of a term loan of $500 million and a €230 million term loan ( $751 million of term loans outstanding at June 30, 2016 ) and $2.45 billion in revolving credit ( $1.29 billion outstanding at June 30, 2016 ), bearing interest at variable rates (although a portion of this debt is hedged through interest rate swap contracts) reduced by $71.9 million of amounts outstanding under letters of credit	
		
•	Senior Notes totaling $600 million , maturing in May 2023 and bearing interest at a 4.75% fixed rate	
		
•	Euro Notes totaling $555 million (€500 million), maturing in April 2024 and bearing interest at a 3.875% fixed rate	
		
•	Receivables securitization facility with availability up to $97 million ( $94 million outstanding as of June 30, 2016 ), maturing in October 2017 and bearing interest at variable commercial paper rates	
From time to time, we may undertake financing transactions to increase our available liquidity, such as our January 2016 amendment to our senior secured credit facilities and the issuance of €500 million of Euro Notes in April 2016. The Rhiag acquisition was the catalyst for the April 2016 issuance of €500 million of Euro Notes. Given that Rhiag is a long term asset, we considered alternative financing options and decided to fund a portion of this acquisition through the issuance of long term notes. Additionally, the interest rates on Rhiag's acquired debt ranged between 6.45% and 7.25%. With the issuance of the €500 million of senior notes at a rate of 3.875%, we were able to replace Rhiag's borrowings with long term financing at favorable rates. This refinancing also provides financial flexibility to execute our long-term growth strategy by freeing up availability under our revolver. If we see an attractive acquisition opportunity, we have the ability to use our revolver to move quickly and have certainty of funding.
As of  June 30, 2016 , we had approximately $1.1 billion  available under our credit facilities. Combined with approximately  $273 million  of cash and equivalents at  June 30, 2016 , we had approximately  $1.4 billion  in available liquidity, a decrease of $63 million over our available liquidity as of December 31, 2015.
We believe that our current liquidity and cash expected to be generated by operating activities in future periods will be sufficient to meet our current operating and capital requirements, although such sources may not be sufficient for future acquisitions depending on their size. While we believe that we currently have adequate capacity, from time to time we may need to raise additional funds through public or private financing, strategic relationships or other arrangements. There can be no assurance that additional funding, or refinancing of our credit facilities, if needed, will be available on terms attractive to us, or at all. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants or higher interest costs. Our failure to raise capital if and when needed could have a material adverse impact on our business, operating results, and financial condition.
Borrowings under the credit agreement accrue interest at variable rates which are tied to LIBOR or CDOR, depending on the currency and the duration of the borrowing, plus an applicable margin rate which is subject to change quarterly based on our reported leverage ratio. We hold interest rate swaps to hedge the variable rates on our credit agreement borrowings (as described in Note 9, "Derivative Instruments and Hedging Activities " to the unaudited condensed consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q), with the effect of fixing the interest rates on the respective notional amounts. After giving effect to these interest rate swap contracts, the weighted average interest rate on borrowings outstanding under our credit facilities at June 30, 2016 was 2.4% . Including our senior notes and the borrowings on our receivables securitization program, our overall weighted average interest rate on borrowings was 3.0% at June 30, 2016 .
Cash interest payments were $42.3 million for the six months ended June 30, 2016 , including a $14.2 million semi-annual interest payment related to our Senior Notes. The semi-annual interest payments on our Senior Notes are made in May and November each year. In October 2016, we will make our first semi-annual interest payment on our Euro Notes totaling €9.7 million; the semi-annual interest payments on our Euro Notes will be made in October and April each year. We had outstanding credit agreement borrowings of $2.0 billion and $0.9 billion at June 30, 2016 and December 31, 2015 , respectively. Of these amounts, $28.3 million and $22.5 million were classified as current maturities at June 30, 2016 and December 31, 2015 respectively. Under the terms of the January 2016 amendment, we have scheduled repayments of $3.1 million for the fiscal quarters ending on September 30, 2016 and December 31, 2016, and $6.2 million each fiscal quarter thereafter through the maturity of the USD term loan maturity in January 2021. We also have scheduled repayments of €1.4 million for the fiscal quarters ending on September 30, 2016 and December 31, 2016, and €2.9 million each fiscal quarter thereafter through the maturity of the Euro term loan in January 2021. We have no other significant principal payments on our credit facilities

56

scheduled prior to the maturity of the receivables securitization program in October 2017. In addition to the repayments under our credit facilities, we will make payments on notes payable and other debt totaling $35.0 million in the next 12 months.
Our credit agreement contains customary covenants that provide limitations and conditions on our ability to enter into certain transactions. The credit agreement also contains financial and affirmative covenants, including limitations on our net leverage ratio and a minimum interest coverage ratio. We were in compliance with all restrictive covenants under our credit agreement as of June 30, 2016 .
As of  June 30, 2016 , the Company had cash of $273 million , of which $196 million was held by foreign subsidiaries. We consider the undistributed earnings of these foreign subsidiaries to be indefinitely reinvested, and accordingly, no provision for U.S. income taxes has been provided thereon. Should these earnings be repatriated in the future, in the form of dividends or otherwise, we would be subject to both U.S. income taxes (subject to adjustment for foreign tax credits) and potential withholding taxes payable to the various foreign countries. We believe that we have sufficient cash flow and liquidity to meet our financial obligations in the U.S. without resorting to repatriation of foreign earnings.
The procurement of inventory is the largest operating use of our funds. We normally pay for aftermarket product purchases at the time of shipment or on standard payment terms, depending on the manufacturer and the negotiated payment terms. We normally pay for salvage vehicles acquired at salvage auctions and under direct procurement arrangements at the time that we take possession of the vehicles.
The following table sets forth a summary of our aftermarket and manufactured inventory procurement for the three and six months ended June 30, 2016 and 2015 (in thousands):

																									
 	Three Months Ended	 	Six Months Ended	 	
 	June 30,	 	June 30,	 	
 	2016	 	2015	 	Change	 	2016	 	2015	 	Change	 	
North America	$	258,900		 	$	257,600		 	$	1,300		 	$	519,100		 	$	489,600		 	$	29,500		(1)  	
Europe	568,900		 	253,800		 	315,100		 	868,100		 	524,600		 	343,500		(2)  	
Specialty	237,100		 	186,800		 	50,300		 	499,400		 	374,400		 	125,000		(3)  	
Glass	167,000		 	—		 	167,000		 	167,000		 	—		 	167,000		(4)  	
Total	$	1,231,900		 	$	698,200		 	$	533,700		 	$	2,053,600		 	$	1,388,600		 	$	665,000		 	
		
(1)	In North America, aftermarket purchases during the six months ended June 30, 2016 increased primarily as a result of our July 2015 acquisition of Parts Channel coupled with lower purchase levels in Q1 2015, due to accelerated purchases in the fourth quarter of 2014 in anticipation of potential labor issues at West Coast ports in the United States.	
		
(2)	In our Europe segment, the increase in purchases was primarily due to our acquisition of Rhiag in March of 2016, which added incremental purchases of $241.8 million in the second quarter of 2016 and $262.5 million year to date. Purchases for our U.K. operations increased in the three and six months ended June 30, 2016 compared to the prior year periods primarily as a result of opening four new hubs since the prior year second quarter and incremental inventory purchases to stock the Tamworth, England national distribution center. These increase s were partially offset by the devaluation of the pound sterling in the first half of 2016 compared to the prior year period.	
		
(3)	The increase in Specialty aftermarket purchases during the three and six months ended June 30, 2016 is primarily due to (i) accelerated inventory purchases to stock two new distribution centers during the first quarter of 2016, (ii) additional purchases to support the increased sales volume as a result of the Coast acquisition, and (iii) additional inventory purchases in the second quarter due to stronger than anticipated sales volumes as a result of our annual trade shows.	
		
(4)	Glass inventory purchases reflect inventory purchases made during the three months ended June 30, 2016 as a result of our April 2016 acquisition of PGW. The amount includes purchases of raw materials used in PGW's manufacturing and fabrication of automotive glass products as well as purchases of aftermarket and refurbished automotive replacement glass and assemblies.	

57

The following table sets forth a summary of our global salvage and self service procurement for the three and six months ended June 30, 2016 and 2015 (in thousands):

																			
 	Three Months Ended	 	Six Months Ended	 	
 	June 30,	 	June 30,	 	
 	2016	 	2015	 	% Change	 	2016	 	2015	 	% Change	 	
North America Wholesale salvage cars and trucks	72		 	75		 	(4.0	)%	 	144		 	145		 	(0.7	)%	 	
Europe Wholesale salvage cars and trucks	6		 	5		 	20.0	 %	 	12		 	11		 	9.1	 %	 	
Self service and "crush only" cars	138		 	131		 	5.3	 %	 	263		 	231		 	13.9	 %	(1)  	
		
(1)	Compared to the the prior year period, we increased our purchases of lower cost self service and "crush only" cars as prices for vehicles have come down in certain markets due to the decline in the prices of scrap and other metals, allowing us to purchase higher quality vehicles at favorable prices.	
Net cash provided by operating activities totaled $355.2 million for the six months ended June 30, 2016 , compared to $282.7 million during the six months ended June 30, 2015 . During the first half of 2016, our EBITDA, excluding $18.3 million in gains on foreign currency forwards that are reflected in investing activities, increased by $78.2 million compared to the first half of 2015, due to both acquisition related growth and organic growth. Additionally, we recognized in costs of goods sold a $10.2 million non-cash inventory step-up adjustment in the second quarter of 2016 related to the sale of inventory acquired at the time of our PGW acquisition.
Cash outflows for our primary working capital accounts (receivables, inventory and payables) totaled $10.0 million  during the six months ended June 30, 2016 , compared to a $29.2 million  cash outflow during the comparable period in 2015. Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period and can be influenced by factors outside of our control. However, we expect that the net change in these working capital items will generally be a cash outflow as we grow our business each year. Cash outflows related to receivables were $34.5 million higher in the first half of 2016 than the prior year period. The increase in accounts receivable is primarily related to our U.K. operations as a result of increased sales; the remaining increase related to our Specialty operations, which experienced larger growth in receivables balances during the first half of 2016 than the prior year period from organic and acquisition revenue growth. Accounts payable represented a $31.0 million cash inflow during the six months ended June 30, 2016, compared to an $18.6 million cash outflow in the prior year period. The increase is primarily related to a rise in the payables balance in our wholesale operations due to the timing of payments.
Cash paid for interest increased by $13.7 million in 2016 primarily as a result of payments for interest on the assumed Rhiag debt upon redemption in addition to payments to terminate Rhiag interest rate swaps and the interest on the debt to acquire PGW and Rhiag. Cash paid for taxes increased by $12.6 million during the first half of 2016 compared to the prior year period.
Net cash used in investing activities totaled $1.34 billion for the six months ended June 30, 2016 , compared to $109.2 million during the six months ended June 30, 2015 . We invested $1.27 billion of cash, net of cash acquired, in business acquisitions during the six months ended June 30, 2016 , which included $601.4 million for our Rhiag acquisition and $661.9 million for our PGW acquisition, compared to $37.2 million for business acquisitions in the comparable period in 2015 . Property, plant and equipment purchases were $102.3 million in the six months ended June 30, 2016 compared to $66.8 million in the comparable period in 2015 . Purchases of property, plant and equipment increased over the prior period in each segment, with North America experiencing the largest increase at $12 million. In the first half of 2016, we entered into foreign currency contracts to fund the purchase price of the Rhiag acquisition, which generated $ 18.3 million of gains; we had no such contracts in the prior year period. During the six months ended June 30, 2016 , cash provided by other investing activities, net was $11.3 million primarily from proceeds on the sale of our interest in our Australian joint venture.
Net cash provided by financing activities totaled $1.18 billion for the six months ended June 30, 2016 , compared to $144.9 million in net cash used by financing activities during the six months ended June 30, 2015 . During the six months ended June 30, 2016 , net borrowings under our credit facilities were $1.17 billion compared to net repayments of  $105.6 million during the six months ended June 30, 2015 . The increase in borrowings during the first half of 2016 is primarily the result of borrowings under our multi-currency revolving credit facility in order to fund the acquisitions of Rhiag and PGW and repay $543.3 million of Rhiag acquired debt and debt related liabilities. Our January 2016 amendment of our credit facilities generated $338.5 million in additional term loan borrowings, a portion of which was used to repay outstanding revolver borrowings. In April 2016, we issued the Euro Notes generating proceeds of $563.5 million . The proceeds from the Euro Notes were used to repay a portion of the borrowings on the revolving credit facility. In connection with our January 2016 amendment of our credit facilities and our April 2016 issuance of the Euro Notes, we paid $16.2 million of debt issuance costs during the six months ended June 30, 2016 ; no such costs were incurred in the prior year period.

58

We intend to continue to evaluate markets for potential growth through the internal development of distribution centers, processing and sales facilities, and warehouses, through further integration of our facilities, and through selected business acquisitions. Our future liquidity and capital requirements will depend upon numerous factors, including the costs and timing of our internal development efforts and the success of those efforts, the costs and timing of expansion of our sales and marketing activities, and the costs and timing of future business acquisitions.
Off-Balance Sheet Arrangements and Future Commitments
We do not have any off-balance sheet arrangements or undisclosed borrowings or debt that would be required to be disclosed pursuant to Item 303 of Regulation S-K under the Securities Exchange Act of 1934. Additionally, we do not have any synthetic leases.
The following table represents our future commitments under contractual obligations as of June 30, 2016 (in millions):

																				
 	Total	 	Remainder of 2016-2017	 	2018-2019	 	2020-2021	 	Thereafter	
Contractual obligations	 	 	 	 	 	 	 	 	 	
Long-term debt (1)	$	3,793.4		 	$	287.7		 	$	201.8		 	$	2,064.0		 	$	1,239.9		
Capital lease obligations (2)	28.4		 	10.8		 	4.2		 	1.8		 	11.6		
Operating leases (3)	1,041.3		 	269.7		 	257.0		 	162.7		 	351.9		
Purchase obligations (4)	391.2		 	391.2		 	—		 	—		 	—		
Contingent consideration liabilities (5)	3.2		 	2.8		 	0.4		 	—		 	—		
Outstanding letters of credit	71.9		 	71.9		 	—		 	—		 	—		
Other asset purchase commitments (6)	93.4		 	79.4		 	11.7		 	2.3		 	—		
Other long-term obligations	 	 	 	 	 	 	 	 	 	
Self-insurance reserves (7)	77.0		 	37.8		 	26.0		 	8.9		 	4.3		
Deferred compensation plans and other retirement obligations (8)	38.4		 	4.9		 	—		 	—		 	33.5		
Long term incentive plan	8.6		 	4.5		 	4.1		 	—		 	—		
Liabilities for unrecognized tax benefits	2.3		 	0.1		 	1.3		 	0.6		 	0.3		
Total	$	5,549.1		 	$	1,160.8		 	$	506.5		 	$	2,240.3		 	$	1,641.5		
		
(1)	Our long-term debt under contractual obligations above includes interest of $476.3 million on the balances outstanding as of June 30, 2016 . The long-term debt balance excludes debt issuances costs as these expenses have already been paid. Interest on our senior notes, notes payable, and other long-term debt is calculated based on the respective stated rates. Interest on our variable rate credit facilities is calculated based on the weighted average rates, including the impact of interest rate swaps through their respective expiration dates, in effect for each tranche of borrowings as of June 30, 2016 . Future estimated interest expense for the remainder of 2016 through 2017, 2018 through 2019, and 2020 through 2021 is $123.7 million, $132.5 million and $133.6 million, respectively. Estimated interest expense beyond 2021 is $86.4 million.	
		
(2)	Interest on capital lease obligations of $1.1 million is included based on incremental borrowing or implied rates. Future estimated interest expense for the remainder of 2016 through 2017, 2018 through 2019, and 2020 through 2021 is $1.1 million, $0.7 million and $0.5 million, respectively. Estimated interest expense beyond 2021 is $7.9 million.	
		
(3)	The operating lease payments above do not include certain tax, insurance and maintenance costs, which are also required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to year. Historically, these expenses have averaged approximately 25% of the corresponding lease payments.	
		
(4)	Our purchase obligations include open purchase orders for aftermarket inventory.	
		
(5)	Our contingent consideration liabilities reflect the undiscounted estimated payments of additional consideration related to business combinations. The actual payments will be determined at the end of the applicable performance periods based on the acquired entities' achievement of the targets specified in the purchase agreements.	
		
(6)	Includes asset purchase commitments related to the construction of a new distribution center for our U.K. operations, commitments to purchase land and buildings, IT related expenditures, and other asset purchase commitments.	

59

		
(7)	Self-insurance reserves include undiscounted estimated payments, net of estimated insurance recoveries, for our employee medical benefits, automobile liability, general liability, directors and officers liability, workers' compensation and property insurance.	
		
(8)	Deferred compensation payments are dependent on elected payment dates. While we expect that these payments will be made more than five years from the latest balance sheet date, payments may be made earlier depending on such elections. Our deferred compensation plans are funded through investments in life insurance policies. Other retirement obligations consist of our expected required contributions to our pension plans. We have not included future funding requirements beyond 2016 in the table above, as these funding projections are not practicable to estimate.	

60

		
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	
Our results of operations are exposed to changes in interest rates primarily with respect to borrowings under our credit facilities, where interest rates are tied to the prime rate, LIBOR or CDOR. Therefore, we implemented a policy to manage our exposure to variable interest rates on a portion of our outstanding variable rate debt instruments through the use of interest rate swap contracts. These contracts convert a portion of our variable rate debt to fixed rate debt, matching the currency, effective dates and maturity dates to specific debt instruments. Net interest payments or receipts from interest rate swap contracts are included as adjustments to interest expense. All of our interest rate swap contracts have been executed with banks that we believe are creditworthy (Wells Fargo Bank, N.A., Bank of America, N.A., RBS Citizens, N.A., Fifth Third Bank and HSBC Bank USA, N.A.).
As of June 30, 2016 , we held 14 interest rate swap contracts representing a total of $760 million of U.S. dollar-denominated notional amount debt, and £50 million of pound sterling-denominated notional amount debt. Our interest rate swap contracts are designated as cash flow hedges and modify the variable rate nature of that portion of our variable rate debt. These swaps have maturity dates ranging from October 2016 through June 2021.
In total, we had 35% of our variable rate debt under our credit facilities at fixed rates at June 30, 2016 compared to 29% at  December 31, 2015 . The fair market value of our swap contracts was a net liability of $6.4 million. The values of such contracts are subject to changes in interest rates.
At June 30, 2016 , we had $1.4 billion of variable rate debt that was not hedged. Using sensitivity analysis, a 100 basis point movement in interest rates would change interest expense by $14.3 million over the next twelve months.
Additionally, we are exposed to currency fluctuations with respect to the purchase of aftermarket products from foreign countries. The majority of our foreign inventory purchases are from manufacturers based in Taiwan. While our transactions with manufacturers based in Taiwan are conducted in U.S. dollars, changes in the relationship between the U.S. dollar and the Taiwan dollar might impact the purchase price of aftermarket products. Our aftermarket operations in Canada, which also purchase inventory from Taiwan in U.S. dollars, are further subject to changes in the relationship between the U.S. dollar and the Canadian dollar. Our aftermarket operations in the U.K. source a portion of their inventory from Taiwan and from other European countries and China, resulting in exposure to changes in the relationship of the pound sterling against the euro and the U.S. dollar. Our aftermarket operations in continental Europe source a portion of their inventory from the Czech Republic as well as Taiwan, resulting in exposure to changes in the relationship of the euro against the Czech koruna and the U.S. dollar. We hedge our exposure to foreign currency fluctuations for certain of our purchases in our European operations, but the notional amount and fair value of these foreign currency forward contracts at June 30, 2016 were immaterial. We do not currently attempt to hedge our foreign currency exposure related to our foreign currency denominated inventory purchases in our North American operations, and we may not be able to pass on any price increases to our customers.
Foreign currency fluctuations may also impact the financial results we report for the portions of our business that operate in functional currencies other than the U.S. dollar. Our operations in Europe and other countries represented 36.7% of our revenue during the six months ended June 30, 2016 . An increase or decrease in the strength of the U.S. dollar against these currencies by 10% would result in a 4% change in our consolidated revenue and a 3% change in our operating income for the six months ended June 30, 2016 .
Other than with respect to a portion of our foreign currency denominated inventory purchases in the U.K. and continental Europe, we do not hold derivative contracts to hedge foreign currency risk. Our net investment in foreign operations is partially hedged by the foreign currency denominated borrowings we use to fund foreign acquisitions. Additionally, we have elected not to hedge the foreign currency risk related to the interest payments on these borrowings as we generate Canadian dollar, pound sterling and euro cash flows that can be used to fund debt payments. As of June 30, 2016 , we had amounts outstanding under our term loan agreement of €230 million, our Euro Notes of €500 million, and our revolving credit facilities of €28.0 million, £50.0 million, and CAD $130.4 million.
We are also exposed to market risk related to price fluctuations in scrap metal and other metals. Market prices of these metals affect the amount that we pay for our inventory as well as the revenue that we generate from sales of these metals. As both our revenue and costs are affected by the price fluctuations, we have a natural hedge against the changes. However, there is typically a lag between the effect on our revenue from metal price fluctuations and inventory cost changes and there is no guarantee that vehicle costs will decrease at the same rate as the metal prices. Therefore, we can experience positive or negative gross margin effects in periods of rising or falling metals prices, particularly when such prices move rapidly. If market prices were to fall at a greater rate than our vehicle acquisition costs, we could experience a decline in operating margin. Scrap metal prices have increased 68% since the fourth quarter of 2015.

61

Item 4.     Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of June 30, 2016 , the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of LKQ Corporation's management, including our Chief Executive Officer and our Chief Financial Officer, of our "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective in providing reasonable assurance that information we are required to disclose in this Quarterly Report on Form 10-Q has been recorded, processed, summarized and reported as of the end of the period covered by this Quarterly Report on Form 10-Q. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Securities Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
Other than the change in internal control resulting from the acquisition of Rhiag on March 18, 2016 and the acquisition of PGW on April 21, 2016, there were no changes in our internal control over financial reporting during the quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

62

PART II
OTHER INFORMATION
Item 1.     Legal Proceedings
None.

Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition and results of operations, and the trading price of our common stock. Please refer to our 2015 Annual Report on Form 10-K, filed with the SEC on February 25, 2016, and our Quarterly Reports on Form 10-Q filed subsequent to the Annual Report on Form 10-K for information concerning risks and uncertainties that could negatively impact us. The following represents changes and/or additions to the risks and uncertainties previously disclosed in such reports. The following risk factors are not necessarily listed in order of importance.
Our operating results and financial condition have been and could continue to be adversely affected by the economic and political conditions in the U.S. and elsewhere.
Changes in economic and political conditions in the U.S. and other countries in which we are located or do business could have a material effect on our company. Changes in such conditions have, in some periods, resulted in fewer miles driven, fewer accident claims, and a reduction of vehicle repairs, all of which could negatively affect our business. The number of new vehicles produced and sold by manufacturers affects our business. A decrease in the number of vehicles on the road results in a decrease in accidents requiring repairs. Moreover, we supply vehicle glass directly to vehicle manufacturers, and a decrease in the number of vehicles produced would result in a decrease in the demand for our glass products.
Our sales are also impacted by changes to the economic health of vehicle owners. The economic health of vehicle owners is affected by many factors, including, among others, general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, taxation, fuel prices, unemployment trends and other matters that influence consumer confidence and spending.  Many of these factors are outside of our control. If any of these conditions worsen, our business, results of operations, financial condition and cash flows could be adversely affected.
In addition, economic conditions, including decreased access to credit, may result in financial difficulties leading to restructurings, bankruptcies, liquidations and other unfavorable events for our customers, suppliers, logistics and other service providers and financial institutions that are counterparties to our credit facilities and interest rate swap transactions. These unfavorable events affecting our business partners could have an adverse effect on our business, results of operations, financial condition and cash flows.
We have a substantial business presence in Europe, including a significant presence in the United Kingdom. In June 2016, voters in the United Kingdom decided by referendum to withdraw from the European Union. The precise timing and impacts of this action on our businesses in the United Kingdom and other parts of Europe are unknown at this time. Since the vote, we have seen fluctuations in exchange rates leading to pricing pressures and unfavorable translation effects on our sterling denominated earnings. As the details of the United Kingdom’s withdrawal from the European Union are negotiated and implemented, our European businesses could be adversely effected as a result of further fluctuations in exchange rates, disruptions to access to markets by United Kingdom companies, interruptions of the movement of goods and services between countries, a decrease of economic activity in Europe, and political or social unrest.

Item 5.     Other Information
None.

63

Item 6.     Exhibits
Exhibits
(b) Exhibits

		
4.1	Indenture dated as of April 14, 2016 among LKQ Italia Bondco S.p.A., as Issuer, LKQ Corporation, certain subsidiaries of LKQ Corporation, the trustee, paying agent, transfer agent, and registar (incorporated herein by reference to Exhibit 4.1 to the Company’s report on Form 8-K filed with the SEC on April 18, 2016).	
4.2	Supplemental Indenture dated as of June 13, 2016 among Auto Kelly a.s., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.	
4.3	Supplemental Indenture dated as of June 13, 2016 among ELIT CZ, spol. s.r.o., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.	
4.4	Supplemental Indenture dated as of June 13, 2016 among Rhiag-Inter Auto Parts Italia S.p.A., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.	
4.5	Supplemental Indenture dated as of June 13, 2016 among Bertolotti S.p.A., LKQ Corporation, LKQ Italia Bondco S.p.A. and the trustee.	
10.1	Change of Control Agreement between LKQ Corporation and Ash T. Brooks dated as of May 2, 2016.
	
10.2	ISDA 2002 Master Agreement between Banco Bilbao Vizcaya Argentaria, S.A. and LKQ Corporation, and related Schedule.	
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
101.INS	XBRL Instance Document	
101.SCH	XBRL Taxonomy Extension Schema Document	
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	

64

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on  August 2, 2016 .

	
		
 	LKQ CORPORATION	
 	 	
 	/s/ DOMINICK ZARCONE	
 	Dominick Zarcone	
 	Executive Vice President and Chief Financial Officer	
 	(As duly authorized officer and Principal Financial Officer)	
 	 	
 	/s/ MICHAEL S. CLARK	
 	Michael S. Clark	
 	Vice President — Finance and Controller	
 	(As duly authorized officer and Principal Accounting Officer)	

65

Exhibit 4.2

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), dated as of June 13, 2016, among Auto Kelly a.s. (the “ Guaranteeing Subsidiary ”), a subsidiary of LKQ Corporation, a Delaware corporation (“ Parent ”), LKQ Italia Bondco S.p.A., a joint stock company ( società per azioni ) organized under the laws of the Republic of Italy (the “ Issuer ”), Parent and BNP Paribas Trust Corporation UK Limited, as trustee under the Indenture referred to below (the “ Trustee ”).
W I T N E S S E T H
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture, dated as of April 14, 2016 (the “ Indenture ”), providing for the issuance of the Issuer’s 3.875% Senior Notes due 2024 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s payment obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “ Note Guarantee ”); and
WHEREAS, pursuant to the Indenture, the Parent, the Issuer and the Guaranteeing Subsidiary and the Trustee are authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1.      CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2.      AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture, including but not limited to Article Ten thereof.
In addition, the obligations of the Guaranteeing Subsidiary and the granting of its Note Guarantee shall be limited as follows:

The obligations of the Guaranteeing Subsidiary pursuant to the Indenture shall not include any payment undertaking, obligation or liability to the extent it would result in the Note Guarantee and/or indemnity violating the prohibition of financial assistance ( finanèní asistence) pursuant to the Section 311 et seq. of the Act No. 90/2012 Coll., the Commercial Corporations Act, in particular, no Note Guarantee and/or indemnity of the Guaranteeing Subsidiary pursuant to the Indenture shall include any payment undertaking, obligations and/or liabilities relating to the repayment of any proceeds of the Notes used to finance the purchase price (or its part) for the Acquisition and related payment obligations or refinance any funds used to finance the purchase price (or its part) for the Acquisition and related payment obligations, provided that, the obligations of the Czech Guarantor pursuant to the Indenture shall not exceed the total amount of €35 million (the “ Czech Guarantor Funding Amount ”).

The maximum amount of the Guaranteeing Subsidiary’s liability under any Note Guarantee and/or indemnity pursuant to this Supplemental Indenture shall be limited to an amount equal to the Czech Limitation Amount (as defined below), being the product of the following formula:

	
			
“ Czech Limitation Amount ”=	A	x G x 0.9	
	O		

where:

(i) “ A ” means the net book value of all assets of the Guaranteeing Subsidiary recorded in its latest annual unconsolidated financial statements (audited, if available) made available to the Trustee or, if they are more up-to-date, its latest interim unconsolidated financial statements (audited, if available) made available to the Trustee;

(ii) “ G ” means the CZK equivalent of the amount of €35 million;

(iii) “ O ” means all liabilities of the Guaranteeing Subsidiary recorded in latest annual unconsolidated financial statements (audited, if available) made available to the Trustee, or, if they are more up-to-date, its latest interim unconsolidated financial statements (audited, if available) made available to the Trustee. The term “liabilities” shall have the meaning attached to it under the accounting standards applicable to the Guaranteeing Subsidiary but, notwithstanding the foregoing, shall at all times:

(1) exclude equity capital ( vlastní kapitál );

(2) include the “G” amount calculated in accordance with paragraph (ii) above;

(3) include all other liabilities guaranteed by (and other off-balance sheet liabilities of) the Guaranteeing Subsidiary under this Supplemental Indenture and the Senior Secured Credit Facility or otherwise;

and

(4) include all other liabilities secured by the Guaranteeing Subsidiary, provided that such liabilities shall only be included up to the amount equal to the net book value of the assets owned by the Guaranteeing Subsidiary subject to such security,

in each case, without double counting, and so that the amount of any contingent liability as described above shall be calculated as the maximum liability upon the occurrence of the contingency giving rise to the relevant liability,

provided, however, that if the Czech Limitation Amount calculated per the above formula exceeds the Czech Guarantor Funding Amount, the Czech Limitation Amount shall be reduced to the Czech Guarantor Funding Amount.

The term “net book value” used for the purpose of the calculation of the Czech Limitation Amount means the book value reduced by corrections and provisions (in Czech opravné položky a oprávky (korekce) ) as set out in decree no. 500/2002 Coll., as amended (the “ Decree ”), implementing Act No. 563/1991 Coll., on Accountancy, as amended or in any other legislation which may supersede the Decree in future.

However in any case the obligations of the Guaranteeing Subsidiary under its Note Guarantee shall never exceed the Czech Guarantor Funding Amount.

3.      RELEASES. Each Note Guarantee shall be automatically and unconditionally released and discharged in accordance with the Indenture.
4.      NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator member of the Board of Directors or holder of Capital Stock of the Issuer or of any Guarantor, as such, shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, this Supplemental Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability.
5.      THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
6.      SUBMISSION TO JURISDICTION. Each of the parties hereto hereby incorporates by reference Section 11.09 of the Indenture.
7.      EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.
8.      THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.
9.      GENERAL PROVISIONS. This Supplement Indenture to be entered by exchange of correspondence. Should a “Caso d’uso”, or an “Enunciazione” or a voluntary registration be triggered after the date hereof, then the relevant applicable registration tax shall be entirely borne by the party that has triggered the “Caso d’uso” or “Enunciazione” or voluntary registration.
[Remainder of Page Intentionally Blank]

Exhibit 4.3

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), dated as of June 13, 2016, among ELIT CZ, spol. s r.o. (the “ Guaranteeing Subsidiary ”), a subsidiary of LKQ Corporation, a Delaware corporation (“ Parent ”), LKQ Italia Bondco S.p.A., a joint stock company ( società per azioni ) organized under the laws of the Republic of Italy (the “ Issuer ”), Parent and BNP Paribas Trust Corporation UK Limited, as trustee under the Indenture referred to below (the “ Trustee ”).
W I T N E S S E T H
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture, dated as of April 14, 2016 (the “ Indenture ”), providing for the issuance of the Issuer’s 3.875% Senior Notes due 2024 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s payment obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “ Note Guarantee ”); and
WHEREAS, pursuant to the Indenture, the Parent, the Issuer and the Guaranteeing Subsidiary and the Trustee are authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1.      CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2.      AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture, including but not limited to Article Ten thereof.
In addition, the obligations of the Guaranteeing Subsidiary and the granting of its Note Guarantee shall be limited as follows:

The obligations of the Guaranteeing Subsidiary pursuant to the Indenture shall not include any payment undertaking, obligation or liability to the extent it would result in the Note Guarantee and/or indemnity violating the prohibition of financial assistance ( finanèní asistence) pursuant to the Section 200 et seq. of the Act No. 90/2012 Coll., the Commercial Corporations Act, in particular, no Guarantee and/or indemnity of the Guaranteeing Subsidiary pursuant to the Indenture shall include any payment undertaking, obligations and/or liabilities relating to the repayment of any proceeds of the Notes used to finance the purchase price (or its part) for the Acquisition and related payment obligations or refinance any funds used to finance the purchase price (or its part) for the Acquisition and related payment obligations, provided that, the obligations of the Guaranteeing Subsidiary pursuant to the Indenture shall not exceed the total amount of €35 million (the “ Czech Guarantor Funding Amount ”).

The maximum amount of the Guaranteeing Subsidiary’s liability under any Note Guarantee and/or indemnity pursuant to this Supplemental Indenture shall be limited to an amount equal to the Czech Limitation Amount (as defined below), being the product of the following formula:

	
			
“ Czech Limitation Amount ”=	A	x G x 0.9	
	O		

where:

(i) “ A ” means the net book value of all assets of the Guaranteeing Subsidiary recorded in its latest annual unconsolidated financial statements (audited, if available) made available to the Trustee or, if they are more up-to-date, its latest interim unconsolidated financial statements (audited, if available) made available to the Trustee;

(ii) “ G ” means the CZK equivalent of the amount of €35 million;

(iii) “ O ” means all liabilities of the Guaranteeing Subsidiary recorded in latest annual unconsolidated financial statements (audited, if available) made available to the Trustee, or, if they are more up-to-date, its latest interim unconsolidated financial statements (audited, if available) made available to the Trustee. The term “liabilities” shall have the meaning attached to it under the accounting standards applicable to the Guaranteeing Subsidiary but, notwithstanding the foregoing, shall at all times:

(1) exclude equity capital ( vlastní kapitál );

(2) include the “G” amount calculated in accordance with paragraph (ii) above;

(3) include all other liabilities guaranteed by (and other off-balance sheet liabilities of) the Guaranteeing Subsidiary under this Supplemental Indenture and the Senior Secured Credit Facility or otherwise;

and

(4) include all other liabilities secured by the Guaranteeing Subsidiary, provided that such liabilities shall only be included up to the amount equal to the net book value of the assets owned by the Guaranteeing Subsidiary subject to such security,

in each case, without double counting, and so that the amount of any contingent liability as described above shall be calculated as the maximum liability upon the occurrence of the contingency giving rise to the relevant liability,

provided, however, that if the Czech Limitation Amount calculated per the above formula exceeds the Czech Guarantor Funding Amount, the Czech Limitation Amount shall be reduced to the Czech Guarantor Funding Amount.

The term “net book value” used for the purpose of the calculation of the Czech Limitation Amount means the book value reduced by corrections and provisions (in Czech opravné položky a oprávky (korekce) ) as set out in decree no. 500/2002 Coll., as amended (the “ Decree ”), implementing Act No. 563/1991 Coll., on Accountancy, as amended or in any other legislation which may supersede the Decree in future.

However in any case the obligations of the Guaranteeing Subsidiary under its Note Guarantee shall never exceed the Czech Guarantor Funding Amount.

3.      RELEASES. Each Note Guarantee shall be automatically and unconditionally released and discharged in accordance with the Indenture.
4.      NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator member of the Board of Directors or holder of Capital Stock of the Issuer or of any Guarantor, as such, shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, this Supplemental Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability.
5.      THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
6.      SUBMISSION TO JURISDICTION. Each of the parties hereto hereby incorporates by reference Section 11.09 of the Indenture.
7.      EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.
8.      THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.
9.      GENERAL PROVISIONS. This Supplement Indenture to be entered by exchange of correspondence. Should a “Caso d’uso”, or an “Enunciazione” or a voluntary registration be triggered after the date hereof, then the relevant applicable registration tax shall be entirely borne by the party that has triggered the “Caso d’uso” or “Enunciazione” or voluntary registration.
[Remainder of Page Intentionally Blank]

Exhibit 4.4

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), dated as of June 13, 2016, among Rhiag-Inter Auto Parts Italia S.p.A. (the “ Guaranteeing Subsidiary ”), a subsidiary of LKQ Corporation, a Delaware corporation (“ Parent ”), LKQ Italia Bondco S.p.A., a joint stock company ( società per azioni ) organized under the laws of the Republic of Italy (the “ Issuer ”), Parent and BNP Paribas Trust Corporation UK Limited, as trustee under the Indenture referred to below (the “ Trustee ”).
W I T N E S S E T H
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture, dated as of April 14, 2016 (the “ Indenture ”), providing for the issuance of the Issuer’s 3.875% Senior Notes due 2024 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s payment obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “ Note Guarantee ”); and
WHEREAS, pursuant to Section 8.01 of the Indenture, the Parent, the Issuer and the Guaranteeing Subsidiary and the Trustee are authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1.      CAPITALIZED TERMS. Unless otherwise specified herein, capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
In this Supplemental Indenture:

“ Credit Support ” means with respect to the Guaranteeing Subsidiary that has carried out a Whitewash Procedure, the security interests granted by such Guaranteeing Subsidiary pursuant to the Note Guarantee.

“ Whitewash Procedure ” means the “whitewash procedure” under Article 2358 of the Italian Civil Code.
2.      AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article Ten thereof.
The Note Guarantee of the Guaranteeing Subsidiary, as consequence of applicable Italian corporate law limitations and in accordance with the Whitewash Procedure, will not exceed at any time, the amount described below.

The Note Guarantee will not exceed at any time an aggregate amount equal to the sum of:

(i)	the aggregate principal amount of any intercompany loans, or other financial support in any form, advanced or granted from time to time to the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) by the Issuer (whether directly or indirectly) since the Issue Date or outstanding on the Issue Date, as resulting from time to time from the latest financial statements ( bilancio di esercizio ) of the Guaranteeing Subsidiary duly approved by the shareholders meeting of the Guaranteeing Subsidiary and/or any of its direct or indirect subsidiaries, as the case may be- notwithstanding any subsequent repayment, reduction or cancellation; and	

		
(ii)	the aggregate principal amount drawn by the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) under any facility agreement (including the Senior Secured Credit Facility) to which the Guaranteeing Subsidiary has acceded as a result of the commitment of the Parent (or any of its direct or indirect subsidiaries) and/or the Issuer notwithstanding any subsequent repayment, reduction or cancellation; and	

The maximum amount that the Guaranteeing Subsidiary may be required to pay in respect of its obligations as Guarantor under the Note Guarantee shall not exceed at any time, the amount of the Credit Support approved by the shareholders’ meeting of the Guaranteeing Subsidiary held on May 30, 2016. In the context of the Whitewash Procedure, pursuant to Article 2358, paragraph 6, of the Italian Civil Code, the ability of holders of the Notes to recover on the Credit Support will be limited to an amount not greater than the distributable profits and the available reserves set out in the most recent “duly approved financial statements” of the Guaranteeing Subsidiary.

Pursuant to Article 1938 of the Italian Civil Code, if a personal guarantee is issued to guarantee conditional or future obligations, the guarantee must be limited to a maximum amount. In this respect, the maximum amount that the Guaranteeing Subsidiary may be required to pay in respect of its obligations as Guarantor under the Note Guarantee shall not exceed an amount equal to 120% of the aggregate principal amount of the Notes.

The Note Guarantee will:

(a)	be a general senior unsecured obligation of the Guaranteeing Subsidiary;	
		
(b)	rank pari passu in right of payment to any existing or future obligations of the Guaranteeing Subsidiary that are not subordinated in right of payment to its Note Guarantee;	
		
(c)	rank senior in right of payment to any future indebtedness of the Guaranteeing Subsidiary that is subordinated in right of payment to its Note Guarantee;	
		
(d)	be effectively subordinated to any existing or future obligations of the Guaranteeing Subsidiary that are secured by property or assets that do not secure its Note Guarantee, to the extent of the value of the property and assets securing such obligations; and	
		
(e)	be subject to the limitations described in this Supplement Indenture.	

3.      RELEASES. The Note Guarantee shall be automatically and unconditionally released and discharged in accordance with Section 10.03 of the Indenture.
4.      NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator member of the Board of Directors or holder of Capital Stock of the Issuer or of any Guarantor, as such, shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, this Supplemental Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability.
5.      THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
6.      SUBMISSION TO JURISDICTION. Each of the parties hereto hereby incorporates by reference Section 11.09 of the Indenture.

7.      EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.
8.      THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.
9.      GENERAL PROVISIONS. This Supplement Indenture to be entered by exchange of correspondence. Should a “Caso d’uso”, or an “Enunciazione” or a voluntary registration be triggered after the date hereof, then the relevant applicable registration tax shall be entirely borne by the party that has triggered the “Caso d’uso” or “Enunciazione” or voluntary registration.
[Remainder of Page Intentionally Blank]

Exhibit 4.5

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), dated as of June 13, 2016, among Bertolotti S.p.A. (the “ Guaranteeing Subsidiary ”), a subsidiary of LKQ Corporation, a Delaware corporation (“ Parent ”), LKQ Italia Bondco S.p.A., a joint stock company ( società per azioni ) organized under the laws of the Republic of Italy (the “ Issuer ”), Parent and BNP Paribas Trust Corporation UK Limited, as trustee under the Indenture referred to below (the “ Trustee ”).
W I T N E S S E T H
WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture, dated as of April 14, 2016 (the “ Indenture ”), providing for the issuance of the Issuer’s 3.875% Senior Notes due 2024 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s payment obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “ Note Guarantee ”); and
WHEREAS, pursuant to Section 8.01 of the Indenture, the Parent, the Issuer and the Guaranteeing Subsidiary and the Trustee are authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
1.      CAPITALIZED TERMS. Unless otherwise specified herein, capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
In this Supplemental Indenture:

“ Credit Support ” means with respect to the Guaranteeing Subsidiary that has carried out a Whitewash Procedure, the security interests granted by such Guaranteeing Subsidiary pursuant to the Note Guarantee.

“ Whitewash Procedure ” means the “whitewash procedure” under Article 2358 of the Italian Civil Code.
2.      AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article Ten thereof.
The Note Guarantee of the Guaranteeing Subsidiary, as consequence of applicable Italian corporate law limitations and in accordance with the Whitewash Procedure, will not exceed at any time, the amount described below.

The Note Guarantee will not exceed at any time an aggregate amount equal to the sum of:

(i)	the aggregate principal amount of any intercompany loans, or other financial support in any form, advanced or granted from time to time to the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) by the Issuer (whether directly or indirectly) since the Issue Date or outstanding on the Issue Date, as resulting from time to time from the latest financial statements ( bilancio di esercizio ) of the Guaranteeing Subsidiary duly approved by the shareholders meeting of the Guaranteeing Subsidiary and/or any of its direct or indirect subsidiaries, as the case may be notwithstanding any subsequent repayment, reduction or cancellation; and	

		
(ii)	the aggregate principal amount drawn by the Guaranteeing Subsidiary (or any of its direct or indirect subsidiaries pursuant to article 2359 of the Italian Civil Code) under any facility agreement (including the Senior Secured Credit Facility) to which the Guaranteeing Subsidiary has acceded as a result of the commitment of the Parent (or any of its direct or indirect subsidiaries) and/or the Issuer- notwithstanding any subsequent repayment, reduction or cancellation; and	

The maximum amount that the Guaranteeing Subsidiary may be required to pay in respect of its obligations as Guarantor under the Note Guarantee shall not exceed at any time, the amount of the Credit Support approved by the shareholders’ meeting of the Guaranteeing Subsidiary held on May 30, 2016. In the context of the Whitewash Procedure, pursuant to Article 2358, paragraph 6, of the Italian Civil Code, the ability of holders of the Notes to recover on the Credit Support will be limited to an amount not greater than the distributable profits and the available reserves set out in the most recent “duly approved financial statements” of the Guaranteeing Subsidiary.

Pursuant to Article 1938 of the Italian Civil Code, if a personal guarantee is issued to guarantee conditional or future obligations, the guarantee must be limited to a maximum amount. In this respect, the maximum amount that the Guaranteeing Subsidiary may be required to pay in respect of its obligations as Guarantor under the Note Guarantee shall not exceed an amount equal to 120% of the aggregate principal amount of the Notes.

The Guarantee will:

(a)	be a general senior unsecured obligation of the Guaranteeing Subsidiary;	
		
(b)	rank pari passu in right of payment to any existing or future obligations of the Guaranteeing Subsidiary that are not subordinated in right of payment to its Note Guarantee;	
		
(c)	rank senior in right of payment to any future indebtedness of the Guaranteeing Subsidiary that is subordinated in right of payment to its Note Guarantee;	
		
(d)	be effectively subordinated to any existing or future obligations of the Guaranteeing Subsidiary that are secured by property or assets that do not secure its Note Guarantee, to the extent of the value of the property and assets securing such obligations; and	
		
(e)	be subject to the limitations described in this Supplement Indenture.	

3.      RELEASES. The Note Guarantee shall be automatically and unconditionally released and discharged in accordance with Section 10.03 of the Indenture.
4.      NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator member of the Board of Directors or holder of Capital Stock of the Issuer or of any Guarantor, as such, shall have any liability for any obligations of the Issuer or the Guarantors under the Notes, this Supplemental Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability.
5.      THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
6.      SUBMISSION TO JURISDICTION. Each of the parties hereto hereby incorporates by reference Section 11.09 of the Indenture.

7.      EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.
8.      THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.
9.      GENERAL PROVISIONS. This Supplement Indenture to be entered by exchange of correspondence. Should a “Caso d’uso”, or an “Enunciazione” or a voluntary registration be triggered after the date hereof, then the relevant applicable registration tax shall be entirely borne by the party that has triggered the “Caso d’uso” or “Enunciazione” or voluntary registration.
[Remainder of Page Intentionally Blank]

Exhibit 10.1

CONFIDENTIAL
Change of Control Agreement
May 2, 2016

Ash T. Brooks
500 W. Madison Street, Suite 2800
Chicago, IL 60661

Dear Mr. Brooks:
LKQ Corporation, a Delaware corporation (the “ Company ”), considers it essential to the best interests of its stockholders to take reasonable steps to retain key management personnel. Further, the Board of Directors of the Company (the “ Board ”) recognizes that the uncertainty and questions that might arise among management in the context of any possible Change of Control (as defined below) of the Company could result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.
In order to reinforce and encourage your continued attention and dedication to your assigned duties without distraction in the face of potentially disturbing circumstances arising from any possible Change of Control, the Company has determined to enter into this letter agreement (the “ Agreement ”), which addresses the terms and conditions of your separation from the Company in connection with a Change of Control or within two (2) years following the Change of Control Date (the “ Change of Control Period ”). Capitalized words that are not otherwise defined herein shall have the meanings assigned to those words in Section 11 hereof.
The Agreement provides severance benefits to you under certain circumstances since you are in a select group of management or highly compensated employees of the Company. This Agreement is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Exhibit A is a part of this Agreement and provides important information regarding this Agreement.

1.	Operation of Agreement . The provisions of this Agreement pertaining to the terms and conditions of your separation from the Company in connection with a Change of Control (collectively, the “ Severance Provisions ”) shall apply only if a Change of Control occurs during the Effective Period. If a Change of Control occurs during the Effective Period, the Severance Provisions become effective on the date of the Change of Control (the “ Change of Control Date ”). Notwithstanding the foregoing, if (a) a Change of Control occurs during the Effective Period; and (b) your employment with the Company is terminated (other than your voluntary resignation without Good Reason or due to your death or Disability) during the Effective Period, but within twelve (12) months prior to the date on which the Change of Control occurs; and (c) it is reasonably demonstrated by you that such termination of employment (i) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or in anticipation of a Change of Control, then the “ Change of Control Date ” shall instead mean the date immediately prior to the date of such termination of employment. In connection with the foregoing, your unvested equity-based compensation awards	

1

that are outstanding as of your termination shall remain outstanding to the extent necessary (but subject in all cases to their maximum term) to enable their potential future vesting and exercisability should a Change of Control occur within twelve months after your termination without Cause by the Company. This Agreement will remain in effect until the later of (x) the last day of the Effective Period; or (y) if a Change of Control occurs during the Effective Period, the date on which all benefits due to you under this Agreement, if any, have been paid. However, this Agreement will expire earlier (i) upon the date that your employment is terminated by the Company for Cause or by you without Good Reason or (ii) upon the first anniversary of the termination of your employment by the Company without Cause if no Change of Control has occurred before such first anniversary.

2.	Termination of Employment by Reason of Death or Disability . Your employment shall terminate automatically if you die during the Change of Control Period. If the Company determines in good faith that you incurred a Disability during the Change of Control Period, it may give you written notice, in accordance with Section 5 hereof, of its intention to terminate your employment. In such event, your employment with the Company shall terminate effective on the thirtieth (30) calendar day after your receipt of such notice if you have not returned to full-time duties within thirty (30) calendar days after such receipt. If your employment is terminated for death or Disability during the Change of Control Period, this Agreement shall terminate without further obligations on the part of the Company other than the obligation to pay to you or your representative, as applicable, the following amounts:	
		
a.	the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination;	
		
b.	the Pro Rata Bonus, which shall be paid to you in a single lump sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of Termination or (ii) the effective date of the Waiver and Release; and	
		
c.	the Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs, policies, arrangements or agreements.	

3.	Termination for Cause; Resignation Other Than for Good Reason . If your employment is terminated for Cause or you resign for other than Good Reason during the Change of Control Period, your employment will terminate on the Date of Termination in accordance with Section 5 hereof and this Agreement shall terminate without further obligations on the part of the Company other than the obligation to pay to you the following:	
		
a.	the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination; and	
		
b.	the Other Benefits, which shall be paid in accordance with the terms and conditions of such plans, programs or policies.	

4.	Termination as a Result of an Involuntary Termination . In the event that your employment with the Company should terminate during the Change of Control Period as a result of an Involuntary Termination, the Company will be obligated, except as provided in Section 8 or Section 9 hereof, to provide you the following benefits:	

a.	Severance Payment . The Company shall pay to you the following amounts:	
		
i.	the Accrued Obligations, which shall be paid to you in a single lump sum cash payment within fifteen (15) calendar days of the Date of Termination;	

		
ii.	the Pro Rata Bonus, which shall be paid to you in a single lump sum cash payment no later than the later of (A) fifteen (15) calendar days following the Date of Termination or (B) the effective date of the Waiver and Release;	
		
iii.	an amount equal to the product of (A) 2.0 times (B) the sum of (1) your Adjusted Base Salary plus (2) the greater of (x) your Target Bonus or (y) the average of the annual bonuses paid or to be paid to you with respect to the immediately preceding three (3) fiscal years, which amount shall be paid to you in a single lump sum cash payment no later than the later of (i) fifteen (15) calendar days following the Date of Termination or (ii) the effective date of the Waiver and Release;	
		
iv.	if you had previously consented to the Company’s request to relocate your principal place of employment more than forty (40) miles from its location immediately prior to the Change of Control, all unreimbursed relocation expenses incurred by you in accordance with the Company’s relocation policies, which expenses shall be paid to you in a single lump sum cash payment no later than the later of (A) fifteen (15) calendar days following the Date of Termination or (B) the effective date of the Waiver and Release; and	
		
v.	the Other Benefits, which shall be paid in accordance with the then-existing terms and conditions of such plans, programs or policies.	

b.	Benefit Continuation . You and your then eligible dependents shall continue to be covered by and participate in the group health and dental care plans (collectively, “ Health Plans ”) of the Company (at the Company’s cost) in which you participated, or were eligible to participate, immediately prior to the Date of Termination through the end of the Benefit Continuation Period; provided , however , that any medical or dental welfare benefit otherwise receivable by you hereunder shall be reduced to the extent that you become covered under a group health or dental care plan providing comparable medical and health benefits. You shall be eligible to participate in such Health Plans on terms that are at least as favorable as those in effect immediately prior to the Date of Termination. However, in the event that the terms of the Company’s Health Plans do not permit you to participate in those plans (other than pursuant to an election under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“ COBRA ”)), in lieu of your and your eligible dependent’s coverage and participation under the Company’s Health Plans, the Company shall pay to you within fifteen (15) calendar days after the effective date of the Waiver and Release a lump sum equal to two (2) times your monthly COBRA premium amount for the number of months remaining in the Benefit Continuation Period. In addition, for the purposes of coverage under COBRA, your COBRA event date will be the date of loss of coverage described in this paragraph above.	

c.	Outplacement Services . The Company shall, at its sole expense as incurred, provide you with outplacement services on such terms and conditions as may be reasonably determined by the Company prior to the Change of Control.	

d.	Acceleration of Stock Awards . All your outstanding awards of restricted stock, stock options, and other equity-based compensation shall become fully vested and exercisable in full immediately upon the effective date of the Waiver and Release; provided, however, that any such awards that would be out of the money as of the Date of Termination may be terminated pursuant to Section 9(b) hereof. In addition, all of your outstanding awards of restricted stock, stock options, and other equity-based compensation that are not assumed	

or substituted with awards of equivalent value in connection with a Change of Control shall become fully vested and exercisable in full immediately upon the Change of Control.

5.	Date and Notice of Termination . Any termination of your employment by the Company or by you during the Change of Control Period shall be communicated by a notice of termination to the other party hereto (the “ Notice of Termination ”). The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. The date of your termination of employment with the Company (the “ Date of Termination ”) shall be determined as follows: (i) if your employment is terminated for Disability, thirty (30) calendar days after a Notice of Termination is received by you (provided that you shall not have returned to the full-time performance of your duties during such thirty (30) calendar day period), (ii) if your employment is terminated by the Company in an Involuntary Termination, the later of the date specified in the Notice of Termination or five (5) calendar days after the date the Notice of Termination is received by you, (iii) if you terminate your employment for Good Reason, five (5) calendar days after the date the Notice of Termination is received by the Company, and (iv) if your employment is terminated by the Company for Cause, the later of the date specified in the Notice of Termination or five (5) calendar days following the date such notice is received by you. The Date of Termination for a resignation of employment other than for Good Reason shall be the date set forth in the applicable notice.	

6.	No Mitigation or Offset; D&O Insurance .	
		
a.	No Mitigation or Offset . You shall not be required to mitigate the amount of any payment provided for herein by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation earned by you as the result of employment by another employer.	
		
b.	D&O Insurance, and Indemnification . Through at least the sixth anniversary of the Date of Termination, the Company shall maintain coverage for you as a named insured on all directors’ and officers’ insurance maintained by the Company for the benefit of its directors and officers on at least the same basis as all other covered individuals and provide you with at least the same corporate indemnification as it provides to other senior executives.	

7.	Confidentiality . You agree to treat all Confidential Information as confidential information entrusted to you solely for use as an employee of the Company, and shall not divulge, reveal or transmit any Confidential Information in any way to persons not employed by the Company at any time from the date hereof until the end of time, whether or not you continue to be an employee of the Company, unless authorized in writing by the Company.	

8.	Code Section 409A . The Agreement is not intended to constitute a "nonqualified deferred compensation plan" within the meaning of Code Section 409A. Notwithstanding the foregoing, in the event this Agreement or any benefit paid under this Agreement to you is deemed to be subject to Code Section 409A, you consent to the Company's adoption of such conforming amendments as the Company deems advisable or necessary, in its sole discretion (but without an obligation to do so), to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A. This Agreement will be interpreted and construed to not violate Code Section 409A, although nothing herein will be construed as an entitlement to or guarantee of any particular tax treatment to you.	

For purposes of this Agreement, a termination of employment means a "separation from service" as defined in Code Section 409A. Each payment made pursuant to any provision of this Agreement shall be considered a separate payment and not one of a series of payments for purposes of Code Section 409A. While it is intended that all payments and benefits provided under this Agreement to you will be exempt from or comply with Code Section 409A, the Company makes no representation or covenant to ensure that the payments under this Agreement are exempt from or compliant with Code Section 409A. The Company will have no liability to you or any other person or entity if a payment or benefit under this Agreement is challenged by any taxing authority or is ultimately determined not to be exempt or compliant. You further understand and agree that you will be entirely responsible for any and all taxes on any benefits payable to you as a result of this Agreement. As a condition of participation in the Agreement, you understand and agree that you will never assert any claims against the Company for reimbursement or payment of any Code Section 409A additional taxes, penalties and/or interest.
If upon your "separation from service" within the meaning of Code Section 409A, you are then a "specified employee" (as defined in Code Section 409A), then solely to the extent necessary to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A, the Company shall defer payment of "nonqualified deferred compensation" subject to Code Section 409A payable as a result of and within six (6) months following such "separation from service" under this Agreement until the earlier of (i) the first business day of the seventh month following your "separation from service," or (ii) ten (10) days after the Company receives written confirmation of your death. Any such delayed payments shall be made without interest. For avoidance of doubt, any payment whose amount is derived from the value of a Company common share shall be calculated using the value of a common share as of the closing on the expiration date of the foregoing Code Section 409A delay period.
To the extent any nonqualified deferred compensation payment to you could be paid in one or more of your taxable years depending upon you completing certain employment-related actions, then any such payments will commence or occur in the later taxable year to the extent required by Code Section 409A.
No reimbursement payable to you pursuant to any provisions of this Agreement or pursuant to any plan or arrangement of the Company shall be paid later than the last day of the calendar year following the calendar year in which the related expense was incurred, and no such reimbursement during any calendar year shall affect the amounts eligible for reimbursement in any other calendar year, except, in each case, to the extent that it does not violate Code Section 409A.
Any reimbursement payable to you under this Agreement or pursuant to any plan or arrangement of the Company shall be paid in accordance with the Company's established procedures provided, however, that to the extent necessary to comply with Code Section 409A, the following requirements will be adhered to: (1) such reimbursement arrangements will provide an objectively determinable nondiscretionary definition of the expenses eligible for reimbursement or of the in-kind benefits to be provided, (2) such reimbursement arrangements will provide for the reimbursement of expenses incurred or for the provision of the in-kind benefits during an objectively and specifically prescribed period (including the lifetime of the service provider), (3) such reimbursement arrangements will provide that the amount of expenses eligible for reimbursement, or in-kind benefits provided, during your taxable year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, (4) the reimbursement of an eligible expense will be made on or before the last day of your taxable year following the taxable year in which the expense was incurred, and (5) the right to reimbursement

or in-kind benefits will not be subject to liquidation or exchange for another benefit. Additionally, to the extent required by Code Section 409A, an eligible reimbursement expense must be incurred by you no later than the end of the second year following the year in which your Date of Termination occurs and any reimbursement payments to you must be made not later than the end of the third year following your Date of Termination (or, in the case of in-kind benefits, by the end of the second year following your Date of Termination).

9.	Certain Reduction of Payments by the Company .	
		
a.	Best Net . Anything in this Agreement to the contrary notwithstanding, in the event that the independent auditors of the Company (the “ Accounting Firm ”) determine that receipt of all payments or distributions in the nature of compensation to or for your benefit, whether paid or payable pursuant to this Agreement or otherwise (“ Payments ”), would subject you to tax under Section 4999 of the Code, the Payments paid or payable pursuant to this Agreement (the “ COC Payments ”), including payments made with respect to equity-based compensation accelerated pursuant to Section 4(d) hereof, but excluding payments made with respect to Sections 4(a)(i) and 4(a)(ii) hereof (except as provided below), may be reduced (but not below zero) to the Reduced Amount, but only if the Accounting Firm determines that the Net After-Tax Receipt of unreduced aggregate Payments would be equal to or less than the Net After-Tax Receipt of the aggregate Payments as if the Payments were reduced to the Reduced Amount. If such a determination is not made by the Accounting Firm, you shall receive all COC Payments to which you are entitled under this Agreement.	

b.	Reduced Amount . If the Accounting Firm determines that Payments should be reduced to the Reduced Amount, the Company shall promptly give you notice to that effect and a copy of the detailed calculation thereof. Absent manifest error, all determinations made by the Accounting Firm under this Section 9 shall be binding upon you and the Company and shall be made as soon as reasonably practicable and in no event later than twenty (20) business days following the Change of Control Date, or such later date on which there has been a Payment. The reduction of the Payments, if applicable, shall be made by reducing the payments and benefits hereunder in the following order, and only to the extent necessary to achieve the Reduced Amount:	
The Company shall reduce or eliminate the Payments, by first reducing or eliminating the portion of the Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the determination.
All fees and expenses of the Accounting Firm in implementing the provisions of this Section 9 shall be borne by the Company. To the extent requested by you, the Company shall cooperate with you in good faith in valuing services provided or to be provided by you (including without limitation, your agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant) before, on or after the date of a change in ownership or control of the Company (within the meaning of Q&A-2(b) of the Treasury Regulations adopted under Section 280G of the Code (the “ Regulations ”)), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the Regulations and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the Regulations in accordance with Q&A-5(a) of the Regulations.

		
c.	Subsequent Adjustment . As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to you or for your benefit pursuant to this Agreement which should not have been so paid or distributed (“ Overpayment ”) or that additional amounts which will have not been paid or distributed by the Company to you or for your benefit pursuant to this Agreement could have been so paid or distributed (“ Underpayment ”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or you that the Accounting Firm believes has a high probability of success, determines that an Overpayment has been made, you shall pay any such Overpayment to the Company; provided , however , that no amount shall be payable by you to the Company if and to the extent such payment would not either reduce the amount of taxes to which you are subject under Sections 1 and 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be paid promptly (and in no event later than sixty (60) days following the date on which the Underpayment is determined) by the Company to you or for your benefit.	

10.	Successors; Binding Agreement .	
		
a.	Assumption by Successor . The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to agree to perform its obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform such obligations if no such succession had taken place; provided , however , that no such assumption shall relieve the Company of its obligations hereunder. As used herein, the “ Company ” shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid which assumes and agrees to perform its obligations by operation of law or otherwise.	
		
b.	Enforceability; Beneficiaries . This Agreement shall be binding upon and inure to the benefit of you (and your personal representatives and heirs) and the Company and any organization which succeeds to substantially all of the business or assets of the Company, whether by means of merger, consolidation, acquisition of all or substantially all of the assets of the Company or otherwise, including, without limitation, as a result of a Change of Control or by operation of law. This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.	

11.	Definitions . For purposes of this Agreement, the following capitalized terms have the meanings set forth below:	
		
a.	“ Accounting Firm ” has the meaning assigned thereto in Section 9 hereof.	

b.	“ Accrued Obligations ” shall mean all compensation earned or accrued through the Date of Termination but not paid as of the Date of Termination, including base salary, bonus for the prior performance year, accrued but unused vacation, and reimbursement of business	

expenses accrued in accordance with the Company’s business expense reimbursement policies.

c.	“ Adjusted Base Salary ” means the greater of your base salary in effect immediately prior to (i) the Change of Control Date or (ii) the Date of Termination.	

d.	“ Agreement ” has the meaning assigned thereto in the second introductory paragraph hereof.	

e.	“Benefit Continuation Period ” means the period beginning on the Date of Termination and ending on the last day of the month in which occurs the earlier of (i) the 24-month anniversary of the Date of Termination and (ii) the date on which you elect coverage for you and your covered dependents under substantially comparable benefit plans of a subsequent employer.	

f.	“ Board ” has the meaning assigned thereto in the first introductory paragraph hereof.	

g.	“ Bonus Opportunity ” for any performance year means your maximum cash bonus opportunity for that year, on the assumption that the Company achieves all applicable performance targets and that you achieve all applicable individual performance criteria.	

h.	“ Cause ” shall mean (i) your engaging in willful and continued failure to substantially perform your material duties with the Company (other than due to becoming Disabled); provided, however , that the Company shall have provided you with written notice of such failure and such failure is not cured by you within twenty (20) calendar days of such notice; (ii) your engaging in misconduct that is materially and demonstrably injurious to the Company; (iii) your conviction of, or plea of no contest to, a felony, other crime of moral turpitude; or (iv) a final non-appealable adjudication in a criminal or civil proceeding that you have committed fraud. For purposes of the previous sentence, no act or failure to act on your part shall be deemed “willful” if it is done, or omitted to be done, by you in good faith and with a reasonable belief that it was in the best interest of the Company.	

i.	“ Change of Control ” shall mean:	

i.	any “person” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company, or (iv) any acquisition pursuant to a transaction that complies with Sections 11(i)(iii)(A), (B), and (C);	

ii.	during any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least three-fourths of the directors then still in office who either were directors at the beginning	

of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

iii.	there is a consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination.	

j.	“ Change of Control Date ” has the meaning assigned thereto in Section 1 hereof.	

k.	“ Change of Control Period ” has the meaning assigned thereto in the second introductory paragraph hereof.	

l.	“ COC Payments ” has the meaning assigned thereto in Section 9 hereof.	

m.	“ Code ” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.	

n.	“ Company ” has the meaning assigned thereto in the first introductory paragraph hereof.	

o.	“ Confidential Information ” shall mean all financial information, trade secrets, personnel records, training and operational manuals, records, contracts, lists, business procedures, business methods, accounts, brochures, and handbooks that was learned or obtained by you in the course of your employment by the Company, and all other documents relating to the Company or persons doing business with the Company that are proprietary to the Company.	

		
p.	“ Date of Termination ” has the meaning assigned thereto in Section 5 hereof.	

q.	“ Disability ” shall mean your incapacity due to physical or mental illness as defined in the long-term disability plan sponsored by the Company or an affiliate of the Company for your benefit and which causes you to be absent from the full-time performance of your duties.	

r.	“ Effective Period ” shall mean the period commencing on the date hereof (the “ Effective Date ”) and ending on the third anniversary of the date of this Agreement; provided, however , that beginning on the third anniversary of the date of this Agreement and on each one-year anniversary thereafter (each such date a “ Renewal Date ”), the Effective Period shall be automatically extended for a period of two years beginning on such Renewal Date, unless at least sixty (60) calendar days prior to such Renewal Date, the Company shall give notice that the Effective Period shall not be so extended.	

s.	“ Good Reason ” shall mean the occurrence of any of the following events or circumstances:	

i.	a substantial adverse change in your title, position, offices, or the nature of your duties or responsibilities from those in effect immediately prior to the Change of Control, or in the position, level, or status of the person to whom you report.	

ii.	a reduction by the Company in your annual base salary, Target Bonus, or benefits as in effect immediately prior to the Change of Control or as the same may be increased from time to time thereafter, other than a general reduction in benefits applicable across similarly situated executives within the Company;	

iii.	a failure by the Company to pay you material compensation or benefits when due including, without limitation, failure by the Company to pay any accrued relocation expenses or Other Benefits;	

iv.	the relocation of the office of the Company where you are principally employed immediately prior to the Change of Control to a location which is more than forty (40) miles from such office of the Company (except for required travel on the Company’s business to an extent substantially consistent with your customary business travel obligations in the ordinary course of business prior to the Change of Control); or any failure by a successor to the Company to assume and agree to perform this Agreement, as contemplated by Section 10(a) hereof, or any agreement with respect to your outstanding equity awards.	
provided, however, that no event or condition set forth in subparagraphs (i) through (v) above shall constitute Good Reason unless (x) you give the Company written notice of objection to such event or condition within sixty (60) calendar days of the initial occurrence of such event or condition and (y) such event or condition is not corrected or remedied, in all material respects, by the Company within thirty (30) calendar days of its receipt of such notice; and provided, further, however , that your mental or physical incapacity following the occurrence of an event described above in subparagraphs (i) through (v) above shall not affect your ability to terminate employment for Good Reason and that your death following delivery of a Notice of Termination shall not affect your estate’s entitlement to the payments and benefits provided hereunder upon an Involuntary Termination. In order to qualify as a termination of employment due to Good Reason, you must resign your employment for Good Reason within forty (40) calendar days after you have provided the Company with the foregoing notice that a Good Reason event has occurred.

t.	“ Involuntary Termination ” shall mean, during the Change of Control Period, (i) your termination of employment by the Company without Cause or (ii) your resignation of employment with the Company for Good Reason.	

		
u.	“ Net After-Tax Receipt ” shall mean the present value (as determined in accordance with Section 280G(d)(4) of the Code) of a Payment net of all taxes imposed on you with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to your taxable income for the immediately preceding taxable year, or such other rate(s) as you certify as likely to apply to you in the relevant tax year(s).	

v.	“ Notice of Termination ” has the meaning assigned thereto in Section 5 hereof.	

w.	“ Other Benefits ” means, to the extent not theretofore paid or provided, any other amounts or benefits required to be paid or provided to you or that you are eligible to receive under any plan, program, policy, practice, contract or agreement of the Company in accordance with such applicable terms at the time of the Date of Termination. Nothing herein shall prohibit the Company from changing, modifying, amending, or eliminating any benefit plans in accordance with the terms of such plans prior to the Date of Termination, with or without prior notice.	

x.	“ Overpayment ” has the meaning assigned thereto in Section 9 hereof.	

y.	“ Pro Rata Bonus ” means a pro rata portion of your Bonus Opportunity for the performance year in which the Date of Termination occurs, calculated based on the number of days that you are employed in the performance year up through and including the Date of Termination.	

z.	“ Payment ” has the meaning assigned thereto in Section 9 hereof.	

aa.	“ Reduced Amount ” shall mean $1,000.00 less than the greatest amount of Payments that can be paid that would not result in the imposition of the excise tax under Section 4999 of the Code.	

ab.	“ Severance Policy ” means the Company’s Severance Policy for Key Executives as adopted on July 21, 2014 and as may be amended from time to time.	

ac.	“ Target Bonus ” for any year means your total cash target, but not maximum, bonus for that year, on the assumption that the Company has achieved, but not exceeded, all applicable performance targets and that you have achieved, but not exceeded, all applicable individual performance criteria.	

ad.	“ Underpayment ” has the meaning assigned thereto in Section 9 hereof.	

ae.	“ Tax Authority ” has the meaning assigned thereto in Section 9 hereof.	

		
12.	Notice . For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Board of Directors, LKQ Corporation, 500 West Madison Street, Suite 2800, Chicago, IL 60661, with a copy to the General Counsel of the Company, or to you at the address set forth on the first page of this Agreement or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.	

13.	Release. As a condition to receiving any payments or benefits pursuant to this Agreement by reason of your death, Disability or Involuntary Termination, you (or in the case of your death, the	

executor of your estate) must execute a waiver and release of claims, including confidentiality and non-disparagement covenants, substantially in the form approved by the Company prior to the Change of Control Date (as set forth on Exhibit B attached hereto) (a “ Waiver and Release ”), and such executed Waiver and Release must be delivered to the Company (and not revoked by you) and become effective by its own terms no later than 55 days after the later of (i) the Change of Control or (ii) the termination of your employment with the Company.

14.	Arbitration . Any dispute or controversy arising under or in connection with this Agreement that cannot be mutually resolved by the parties hereto shall be settled exclusively by arbitration in Chicago, Illinois under the employment arbitration rules of the American Arbitration Association before one arbitrator of exemplary qualifications and stature, who shall be selected jointly by the Company and you, or, if the Company and you cannot agree on the selection of the arbitrator, such arbitrator shall be selected by the American Arbitration Association. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties hereby agree that the arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. The Company agrees to pay as incurred, to the fullest extent permitted by law, the costs and fees of the arbitration, including all legal fees and expenses which you may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, you or others of the validity or enforceability of, or liability under, any provision of this Agreement (including as a result of any contest by you about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.	

15.	Miscellaneous .	
		
a.	Amendments, Waivers, Etc . No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof. Notwithstanding the foregoing and for avoidance of doubt, this Agreement does not supersede or replace the Severance Policy. However, any payments or benefits provided (or to be provided) under this Agreement shall be reduced and offset by payments or benefits of the same type that are received by you from the Company under the Severance Policy or any other severance arrangement.	
		
b.	Validity . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.	
		
c.	Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.	
		
d.	No Contract of Employment . Nothing in this Agreement shall be construed as giving you any right to be retained in the employ of the Company or shall affect the terms and	

conditions of your employment with the Company prior to the commencement of the Change of Control Period.
		
e.	Withholding . Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes.	
		
f.	Source of Payments . All payments provided under this Agreement shall be paid in cash from the general funds of the Company, and no special or separate fund shall be established, and no other segregation of assets made, to assure payment. You will have no right, title or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from the Company hereunder, such right shall be no greater than the right of an unsecured creditor of the Company.	
		
g.	Headings . The headings contained in this Agreement are intended solely for convenience of reference and shall not affect the rights of the parties to this Agreement.	
		
h.	Governing Law . This Agreement is governed by ERISA and, to the extent applicable, the laws of the State of Delaware without regard to conflicts of law.	
		
i.	Effect on Benefit Plans . In the event of any inconsistency between the provisions of this agreement and the provisions of any benefit plan of the Company, the provisions that are more favorable to you shall control.	
* * * * *
By signing below, you acknowledge that this Agreement sets forth our agreement on the subject matter hereof. Kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

	
			
Sincerely,	
 	
LKQ CORPORATION	

By:	/s/ VICTOR CASINI	
Name: Victor M. Casini	
Title: Senior Vice President and General Counsel	

Agreed to as of this 2nd day of May, 2016

	
	
/s/ ASH BROOKS	
Ash T. Brooks	
Senior Vice President and Chief	
Information Officer	

EXHIBIT A

The Agreement, including its Exhibits, constitutes both the official plan document and the required summary plan description under ERISA.
ELIGIBILITY
The Agreement is effective for the individual named in the Agreement (“ you ”).
BENEFITS
You shall be eligible for severance benefits at such times and in such amounts as may be specified in your Agreement.
OTHER IMPORTANT INFORMATION
A. Agreement Administration . As the Agreement Administrator, the Company has the full and sole discretionary authority to administer and interpret the Agreement, including discretionary authority to determine eligibility for participation in and for benefits under the Agreement, to determine the amount of benefits (if any) payable per participant, and to interpret any terms of this document. All determinations by the Agreement Administrator will be final and conclusive upon all persons and be given the maximum possible deference allowed by law. The Agreement Administrator is the “named fiduciary” of the Agreement for purposes of ERISA and will be subject to the applicable fiduciary standards of ERISA when acting in such capacity. The Company may delegate in writing to any other person all or a portion of its authority or responsibility with respect to the Agreement.
B. Source of Benefits . The Agreement is unfunded, and all severance benefits will be paid from the general assets of the Company or its successor. No contributions are required under the Agreement.
C. Claims Procedure . If you believe you have been incorrectly denied a benefit or are entitled to a greater benefit than the benefit you received under the Agreement, you may submit a signed, written application to the Company’s Senior Vice President of Human Resources (“ Claims Administrator ”). You will be notified in writing of the approval or denial of this claim within ninety (90) days of the date that the Claims Administrator receives the claim, unless special circumstances require an extension of time for processing the claim. In the event an extension is necessary, you will be provided written notice prior to the end of the initial ninety (90) day period indicating the special circumstances requiring the extension and the date by which the Claims Administrator expects to notify you of approval or denial of the claim. In no event will an extension extend beyond ninety (90) days after the end of the initial ninety (90) day period. If your claim is denied, the written notification will state specific reasons for the denial, make specific reference to the Agreement provision(s) on which the denial is based, and provide a description of any material or information necessary for you to perfect the claim and why such material or information is necessary. The written notification will also provide a description of the Agreement’s review procedures and the applicable time limits, including a statement of your right to bring a civil suit under section 502(a) of ERISA following denial of your claim on review.
You will have sixty (60) days from receipt of the written notification of the denial of your claim to file a signed, written request for a full and fair review of the denial by a review panel which will be a named fiduciary of the Agreement for purposes of such review. This request should include the reasons you are requesting a review and may include facts supporting your request and any other relevant comments,

documents, records and other information relating to your claim. Upon request and free of charge, you will be provided with reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. A final, written determination of your eligibility for benefits shall be made within sixty (60) days of receipt of your request for review, unless special circumstances require an extension of time for processing the claim, in which case you will be provided written notice of the reasons for the delay within the initial sixty (60) day period and the date by which you should expect notification of approval or denial of your claim. This review will take into account all comments, documents, records and other information submitted by you relating to your claim, whether or not submitted or considered in the initial review of your claim. In no event will an extension extend beyond sixty (60) days after the end of the initial sixty (60) day period. If an extension is required because you fail to submit information that is necessary to decide your claim, the period for making the benefit determination on review will be tolled from the date the notice of extension is sent to you until the date on which you respond to the request for additional information. If your claim is denied on review, the written notification will state specific reasons for the denial, make specific reference to the Agreement provision(s) on which the denial is based and state that you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. The written notification will also include a statement of your right to bring an action under section 502(a) of ERISA.
If your claim is initially denied or is denied upon review, you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, any document, record or other information that demonstrates that (1) your claim was denied in accordance with the terms of the Agreement, and (2) the provisions of the Agreement have been consistently applied to similarly situated participants, if any. In pursuing any of your rights set forth in this section, your authorized representative may act on your behalf.
If you do not receive notice within the time periods described above, whether on initial determination or review, you may initiate a lawsuit under Section 502(a) of ERISA.
D. Indemnification. The Company agrees to indemnify its officers and employees and the members of the Board of Directors of the Company from all liabilities from their acts or omissions in connection with the administration, amendment or termination of the Agreement, to the maximum extent permitted by applicable law.
E. Severability.  If any provision of the Agreement is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Agreement, and the Agreement will be construed and enforced as if such provision had not been included.
F. Headings.  Headings in the Agreement are for purposes of reference only and will not limit or otherwise affect the meaning hereof.
STATEMENT OF ERISA RIGHTS
As a participant in the Agreement you are entitled to certain rights and protections under ERISA. ERISA provides that all Agreement participants shall be entitled to:
A. Receive Information About Your Agreement and Benefits
Examine, without charge, at the Agreement Administrator’s office and at other specified locations, such as work sites, all documents governing the Agreement.

Obtain, upon written request to the Agreement Administrator, copies of documents governing the operation of the Agreement. The Agreement Administrator may impose a reasonable charge for the copies.
B. Prudent Actions by Agreement Fiduciaries
In addition to creating rights for Agreement participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Agreement, called “fiduciaries” of the Agreement, have a duty to do so prudently and in the interest of you and other Agreement participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.
C. Enforce Your Rights
If your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Agreement documents and do not receive it within 30 days, you may file suit in a federal court. In such a case, the court may require the Agreement Administrator to provide the materials and pay you up to $110.00 per day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Agreement Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court after you have completed the Agreement's administrative appeals process. If you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
D. Assistance With Your Questions
If you have any questions about the Agreement, you should contact the Agreement Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Agreement Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

ADDITIONAL AGREEMENT INFORMATION

		
Name of Agreement:	Change of Control Agreement	
Employer Sponsoring Agreement:	LKQ Corporation.
500 West Madison Street, Suite 2800, Chicago, IL 60661	
Employer Identification Number:	36-4215970	
Agreement Number:	511	
Agreement Year:	Calendar Year	
Agreement Administrator:	LKQ Corporation
c/o Senior Vice President of Human Resources
500 West Madison Street, Suite 2800, Chicago, IL 60661
Telephone No. (312) 621-1950	
Agent for Service of Legal Process:	Agreement Administrator, at the above address	
Type of Agreement:	Employee Welfare Benefit Plan providing for severance benefits	
Agreement Costs:	The cost of the Agreement is paid by LKQ Corporation	
Type of Administration:	Self-administered by the Agreement Administrator	

EXHIBIT B
WAIVER AND GENERAL RELEASE AGREEMENT
This Waiver and Release Agreement (this “ Release ”) is entered into as of the date indicated on the signature page of this Release by and between LKQ Corporation, a Delaware corporation (the “ Company ”) and (“ Employee ”). Employee has been employed by the Company, and the parties are entering into this Release because the employment relationship is ending, without fault or wrongdoing on the part of either the Company or Employee, who agree as follows:

16.	Release .	
		
a.	In exchange for the valuable consideration set forth in the Change of Control Agreement dated as of ____________ ___, 20___ (the “ Letter Agreement ”), between Employee and the Company, the receipt and adequacy of which are herein acknowledged, Employee hereby agrees to release and forever discharge the Company and its present, former and future partners, shareholders, affiliates, direct and indirect parents, subsidiaries, successors, directors, officers, employees, agents, attorneys, heirs and assigns (the “ Released Parties ”), from any and all claims, actions and causes of action (the “ Claims ”) arising out of (i) his employment relationship with and service as an employee of the Company and its affiliates, and the termination of such relationship or service, or (ii) any event, condition, circumstance or obligation that occurred, existed or arose on or prior to the date hereof, including, but not limited to any Claims under Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans With Disabilities Act of 1990, the Civil Rights Act of 1866, the Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974 (ERISA), the Family and Medical Leave Act of 1993, the California Fair Employment and Housing Act; the California Workers’ Compensation Act; the California Unruh and Ralph Civil Rights Laws; the California Alcohol and Drug Rehabilitation Law and any other federal, state or local law, statute, regulation or ordinance, or law of any foreign jurisdiction, whether such Claim arises under statute or common law and whether or not Employee is presently aware of the existence of such Claim. Employee also forever releases, discharges and waives any right he may have to recover in any proceeding brought by any federal, state or local agency against the Released Parties to enforce any laws. To ensure that this Release is fully enforceable in accordance with its terms, Employee agrees to waive any and all rights to any Claims, whether or not he knows or suspects them to exist in his favor, which if known to him would have materially affected his execution of this Release. Notwithstanding the foregoing, this Release does not apply to Employee’s rights, claims, or benefits under the Letter Agreement or to Employee’s rights, if any, to payment of benefits pursuant to any employee benefit plan. This Release also does not apply to Employee’s rights, claims, or benefits claims for unemployment compensation benefits, workers compensation benefits, claims under the Fair Labor Standards Act, health insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), or claims with regard to vested benefits under a retirement plan governed by ERISA.	
		
b.	To ensure that this Release is fully enforceable in accordance with its terms, Employee hereby agrees to waive any and all rights under Section 1542 of the California Civil Code (to the extent applicable) as it exists from time to time, which provides:	

A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.
In addition, to ensure that this Release is fully enforceable in accordance with its terms, Employee hereby agrees to waive any protection that may exist under any comparable or similar statute and under any principle of common law of the United States or any and all States.
EMPLOYEE UNDERSTANDS THAT, BY SIGNING THIS RELEASE, EMPLOYEE WILL HAVE WAIVED ANY RIGHT THAT HE MAY HAVE TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE COMPANY AND THE RELEASED PARTIES BASED ON ANY ACT OR OMISSIONS BY THEM UP TO THE DATE OF SIGNING THIS AGREEMENT.

c.	In further consideration of the payments and benefits provided to Employee under the Letter Agreement, Employee hereby releases and forever discharges the Released Parties from any and all Claims that he may have as of the date he signs this Release arising under the federal Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ ADEA ”). By signing this Release, Employee hereby acknowledges and confirms the following: (i) he was advised by the Company in connection with his termination to consult with an attorney of his choice prior to signing this Release and to have such attorney explain to him the terms of this Release, including, without limitation, the terms relating to his release of claims arising under the ADEA; (ii) if Employee is 40 years of age or older as of the date of execution of this Release, he was given a period of not fewer than 21 calendar days to consider the terms of this Release and to consult with an attorney of his choosing with respect thereto; (iii) he is providing the release and discharge set forth in this Paragraph 1(c) only in exchange for consideration in addition to anything of value to which he is already entitled and (iv) he can revoke this Release without it becoming effective as described below.	
		
17.	No Legal Claim . Employee has not commenced any legal action, which term includes, without limitation, any demand for arbitration proceedings and any charge, complaint, filing or submission with any federal, state or local agency, court or other tribunal, to assert any Claim against a Released Party, and covenants and agrees not to do so in the future with respect to the matters released herein. If Employee commences or joins any legal action against a Released Party, Employee agrees that such an action is prohibited by this Release, and further agrees to promptly indemnify such Released Party for its reasonable costs and attorneys fees incurred in defending such action as well as forfeit or return any monetary judgment obtained by Employee against any Released Party in such action. Nothing in this Paragraph 2 is intended to reflect any party’s belief that Employee’s waiver of claims under the ADEA is invalid or unenforceable under this Release, it being the intent of the parties that such claims are waived.	
		
18.	Nondisparagement . Employee agrees to refrain, except as required by law or in connection with a judicial proceeding, from making directly or indirectly, now or at any time in the future, any written or oral statements, representations or other communications that disparage or are otherwise damaging to the business or reputation of the Released Parties.	
		
19.	Continuing Obligations . This Release shall not supersede any continuing obligations Employee may have under the terms of the Letter Agreement or any other agreement between Employee and the Company.	
		
20.	Disclaimer . Employee hereby certifies that Employee has read the terms of this Release, that Employee has been advised by the Company to consult with an attorney of Employee’s own	

choice prior to executing this Release, that Employee has had an opportunity to do so, and that Employee understands the provisions and consequences of this Release. Employee further certifies that the Company has not made any representation to Employee concerning this Release other than those contained herein.
		
21.	Governing Law . This Release is governed by ERISA and, to the extent applicable, the laws of the State of Delaware without regard to conflicts of law.	
		
22.	Separability of Clauses . If any provisions of this Release shall be finally determined to be invalid or unenforceable under applicable law by a court of competent jurisdiction, that part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining provisions of this Release.	
		
23.	Counterparts . This Release may be executed by the parties hereto in counterparts, each of which shall be deemed an original, but both such counterparts shall together constitute one and the same document.	
		
24.	Effectiveness . This Release shall be effective only when it has been executed by Employee and the executed original has been returned to the Company, and any applicable revocation period has expired.	
IN WITNESS WHEREOF, the Company has caused this Release to be signed by its duly authorized officer, and Employee has executed this Release as of the day and year indicated below Employee’s signature.

		
LKQ CORPORATION	
By:	 	
 	Name:	
 	Title:	

If Employee is 40 years of age or older as of the date of execution of this Release, Employee shall have the right to revoke this Release during the seven-day period (the “ Revocation Period ”) commencing immediately following the date he signs and delivers this Release to the Company. The Revocation Period shall expire at 5:00 p.m. [INSERT TIME ZONE] Time on the last day of the Revocation Period; provided , however , that if such seventh day is not a business day, the Revocation Period shall extend to 5:00 p.m. on the next succeeding business day. In the event Employee revokes this Release, all obligations of the Company under this Release and under any agreement which are conditional upon this Release shall terminate and be of no further force and effect as of the date of such revocation. No such revocation by Employee shall be effective unless it is in writing and signed by him and received by the Company prior to the expiration of the Revocation Period at the following address:

LKQ Corporation
ATTN: General Counsel
500 W. Madison Street, Suite 2800
Chicago, IL 60661

I HAVE READ AND AGREE
TO THIS RELEASE:

	
Name:	
 	
Date:	

Exhibit 10.2

Execution Version
ISDA
International Swaps and Derivatives Association, Inc.
2002 MASTER AGREEMENT

		
dated as of	May 20, 2016	

	
			
BANCO BILBAO VIZCAYA ARGENTARIA, S.A.  (“Party A”)  established as a  bank
under the laws of the Kingdom of Spain	and	EACH ENTITY LISTED IN EXHIBIT A OF THE SCHEDULE (each a “Party B”)  	

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that are or will be governed by this 2002 Master Agreement, which includes the schedule (the “Schedule”), and the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties or otherwise effective for the purpose of confirming or evidencing those Transactions. This 2002 Master Agreement and the Schedule are together referred to as this “Master Agreement”.
Accordingly, the parties agree as follows:¯

1.	Interpretation	
(a)     Definitions . The terms defined in Section 14 and elsewhere in this Master Agreement will have the meanings therein specified for the purpose of this Master Agreement.
(b)     Inconsistency . In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement, such Confirmation will prevail for the purpose of the relevant Transaction.
(c)     Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions.
		
2.	Obligations	
		
(a)	General Conditions.	
(i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.

Copyright © 2002 by International Swaps and Derivatives Association, Inc.

(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other condition specified in this Agreement to be a condition precedent for the purpose of this Section 2(a)(iii).
(b) Change of Account . Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the Scheduled Settlement Date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change.
		
(c)	Netting of Payments. If on any date amounts would otherwise be payable:¯	
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party’s obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by which the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount and payment obligation will be determined in respect of all amounts payable on the same date in the same currency in respect of those Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or any Confirmation by specifying that “Multiple Transaction Payment Netting” applies to the Transactions identified as being subject to the election (in which case clause (ii) above will not apply to such Transactions). If Multiple Transaction Payment Netting is applicable to Transactions, it will apply to those Transactions with effect from the starting date specified in the Schedule or such Confirmation, or, if a starting date is not specified in the Schedule or such Confirmation, the starting date otherwise agreed by the parties in writing. This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries.

(d)	Deduction or Withholding for Tax.	
(i) Gross-Up. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party (“X”) will:¯
(1) promptly notify the other party (“Y”) of such requirement;
(2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:¯
(A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, after a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law.
(ii) Liability. If:¯
(1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4);

(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

3.	Representations	
Each party makes the representations contained in Sections 3(a), 3(b), 3(c), 3(d), 3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement). If any “Additional Representation” is specified in the Schedule or any Confirmation as applying, the party or parties specified for such Additional Representation will make and, if applicable, be deemed to repeat such Additional Representation at the time or times specified for such Additional Representation.

(a)	Basic Representations.	
(i) Status. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors’ rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it, any of its Credit Support Providers or any of its applicable Specified Entities any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true.
(g) No Agency. It is entering into this Agreement, including each Transaction, as principal and not as agent of any person or entity.
		
4.	Agreements	
Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:¯

		
(a)	Furnish Specified Information. It will deliver to the other party or, in certain cases under clause (iii) below, to such government or taxing authority as the other party reasonably directs:¯	
(i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such other party and to be executed and to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable.

(b)	Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.	
(c) Comply With Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organised, managed and controlled or considered to have its seat, or where an Office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”), and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party’s execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.
		
5.	Events of Default and Termination Events	
		
(a)	Events of Default. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes (subject to Sections 5(c) and 6(e)(iv)) an event of default (an “Event of Default”) with respect to such party:¯	
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) required to be made by it if such failure is not remedied on or before the first Local Business Day in the case of any such payment or the first Local Delivery Day in the case of any such delivery after, in each case, notice of such failure is given to the party;
(ii) Breach of Agreement; Repudiation of Agreement.
(1) Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied within 30 days after notice of such failure is given to the party; or
(2) the party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, this Master Agreement, any Confirmation executed and delivered by that party or any
Transaction evidenced by such a Confirmation (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document, or any security interest granted by such party or such Credit Support Provider to the other party pursuant to any such Credit Support Document, to be in full force and effect for the purpose of this Agreement (in each case other than in accordance with its terms) prior to the satisfaction of all obligations of

such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
(iv) Misrepresentation . A representation (other than a representation under Section 3(e) or 3(f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated;
(v) Default Under Specified Transaction. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:¯
(1) defaults (other than by failing to make a delivery) under a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction;
(2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment due on the last payment or exchange date of, or any payment on early termination of, a Specified Transaction (or, if there is no applicable notice requirement or grace period, such default continues for at least one Local Business Day);
(3) defaults in making any delivery due under (including any delivery due on the last delivery or exchange date of) a Specified Transaction or any credit support arrangement relating to a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, such default results in a liquidation of, an acceleration of obligations under, or an early termination of, all transactions outstanding under the documentation applicable to that Specified Transaction; or
(4) disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, a Specified Transaction or any credit support arrangement relating to a Specified Transaction that is, in either case, confirmed or evidenced by a document or other confirming evidence executed and delivered by that party, Credit Support Provider or Specified Entity (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf);
(vi) Cross-Default. If “Cross-Default” is specified in the Schedule as applying to the party, the occurrence or existence of:¯
(1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) where the aggregate principal amount of such agreements or instruments, either alone or together with the amount, if any, referred to in clause (2) below, is not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments before it would otherwise have been due and payable; or
(2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments under such agreements or instruments on the due date for payment (after giving effect to any applicable notice requirement or grace period) in an aggregate amount, either alone or together with the amount, if any, referred to in clause (1) above, of not less than the applicable Threshold Amount;
(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party:¯
(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4)(A) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official, or (B) has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its

winding-up or liquidation, and such proceeding or petition is instituted or presented by a person or entity not described in clause (A) above and either (I) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (II) is not dismissed, discharged, stayed or restrained in each case within 15 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 15 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) above (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, or reorganises, reincorporates or reconstitutes into or as, another entity and, at the time of such consolidation, amalgamation, merger, transfer, reorganisation, reincorporation or reconstitution:¯
(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party; or
(2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement.
		
(b)	Termination Events. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes (subject to Section 5(c)) an Illegality if the event is specified in clause (i) below, a Force Majeure Event if the event is specified in clause (ii) below, a Tax Event if the event is specified in clause (iii) below, a Tax Event Upon Merger if the event is specified in clause (iv) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to clause (v) below or an Additional Termination Event if the event is specified pursuant to clause (vi) below:¯	
(i) Illegality. After giving effect to any applicable provision, disruption fallback or remedy specified in, or pursuant to, the relevant Confirmation or elsewhere in this Agreement, due to an event or circumstance (other than any action taken by a party or, if applicable, any Credit Support Provider of such party) occurring after a Transaction is entered into, it becomes unlawful under any applicable law (including without limitation the laws of any country in which payment, delivery or compliance is required by either party or any Credit Support Provider, as the case may be), on any day, or it would be unlawful if the relevant payment, delivery or compliance were required on that day (in each case, other than as a result of a breach by the party of Section 4(b)):¯
(1) for the Office through which such party (which will be the Affected Party) makes and receives payments or deliveries with respect to such Transaction to perform any absolute or contingent obligation to make a payment or delivery in respect of such Transaction, to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or
(2) for such party or any Credit Support Provider of such party (which will be the Affected Party) to perform any absolute or contingent obligation to make a payment or delivery which such party or Credit Support Provider has under any Credit Support Document relating to such Transaction, to receive a payment or delivery under such Credit Support Document or to comply with any other material provision of such Credit Support Document;
(ii) Force Majeure Event. After giving effect to any applicable provision, disruption fallback or remedy specified in, or pursuant to, the relevant Confirmation or elsewhere in this Agreement, by reason of force majeure or act of state occurring after a Transaction is entered into, on any day:¯
the Office through which such party (which will be the Affected Party) makes and receives payments or deliveries with respect to such Transaction is prevented from performing any absolute or contingent obligation to make a payment or delivery in respect of such Transaction, from receiving a payment or delivery in respect of such Transaction or from complying with any other material provision of this Agreement relating to such Transaction (or would be so prevented if such payment, delivery or compliance were required on that day), or it becomes impossible orimpracticable for such Office so to perform, receive or comply (or it would be impossible or impracticable for such Office so to perform, receive or comply if such payment, delivery or compliance were required on that day); or

(1) such party or any Credit Support Provider of such party (which will be the Affected Party) is prevented from performing any absolute or contingent obligation to make a payment or delivery which such party or Credit Support Provider has under any Credit Support Document relating to such Transaction, from receiving a payment or delivery under such Credit Support Document or from complying with any other material provision of such Credit Support Document (or would be so prevented if such payment, delivery or compliance were required on that day), or it becomes impossible or impracticable for such party or Credit Support Provider so to perform, receive or comply (or it would be impossible or impracticable for such party or Credit Support Provider so to perform, receive or comply if such payment, delivery or compliance were required on that day),
so long as the force majeure or act of state is beyond the control of such Office, such party or such Credit Support Provider, as appropriate, and such Office, party or Credit Support Provider could not, after using all reasonable efforts (which will not require such party or Credit Support Provider to incur a loss, other than immaterial, incidental expenses), overcome such prevention, impossibility or impracticability;
(iii) Tax Event. Due to (1) any action taken by a taxing authority, or brought in a court of competent jurisdiction, after a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (2) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Settlement Date (A) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 9(h)) or (B) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 9(h)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));
(iv) Tax Event Upon Merger. The party (the “Burdened Party”) on the next succeeding Scheduled Settlement Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 9(h)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets (or any substantial part of the assets comprising the business conducted by it as of the date of this Master Agreement) to, or reorganising, reincorporating or reconstituting into or as, another entity (which will be the Affected Party) where such action does not constitute a Merger Without Assumption;
(v) Credit Event Upon Merger. If “Credit Event Upon Merger” is specified in the Schedule as applying to the party, a Designated Event (as defined below) occurs with respect to such party, any Credit Support Provider of such party or any applicable Specified Entity of such party (in each case, “X”) and such Designated Event does not constitute a Merger Without Assumption, and the creditworthiness of X or, if applicable, the successor, surviving or transferee entity of X, after taking into account any applicable Credit Support Document, is materially weaker immediately after the occurrence of such Designated Event than that of X immediately prior to the occurrence of such Designated Event (and, in any such event, such party or its successor, surviving or transferee entity, as appropriate, will be the Affected Party). A “Designated Event” with respect to X means that:¯
(1) X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets (or any substantial part of the assets comprising the business conducted by X as of thedate of this Master Agreement) to, or reorganises, reincorporates or reconstitutes into or as, another entity;
(2) any person, related group of persons or entity acquires directly or indirectly the beneficial ownership of (A) equity securities having the power to elect a majority of the board of directors (or its equivalent) of X or (B) any other ownership interest enabling it to exercise control of X; or
(3) X effects any substantial change in its capital structure by means of the issuance, incurrence or guarantee of debt or the issuance of (A) preferred stock or other securities convertible into or exchangeable for debt or preferred stock or (B) in the case of entities other than corporations, any other form of ownership interest; or
(vi) Additional Termination Event. If any “Additional Termination Event” is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties will be as specified for such Additional Termination Event in the Schedule or such Confirmation).
		
(c)	Hierarchy of Events.	
(i) An event or circumstance that constitutes or gives rise to an Illegality or a Force Majeure Event will not, for so long as that is the case, also constitute or give rise to an Event of Default under Section 5(a)(i), 5(a)(ii)(1) or 5(a)(iii)(1) insofar as such event or circumstance relates to the failure to make any payment or delivery or a failure to comply with any other material provision of this Agreement or a Credit Support Document, as the case may be.

(ii) Except in circumstances contemplated by clause (i) above, if an event or circumstance which would otherwise constitute or give rise to an Illegality or a Force Majeure Event also constitutes an Event of Default or any other Termination Event, it will be treated as an Event of Default or such other Termination Event, as the case may be, and will not constitute or give rise to an Illegality or a Force Majeure Event.
(iii) If an event or circumstance which would otherwise constitute or give rise to a Force Majeure Event also constitutes an Illegality, it will be treated as an Illegality, except as described in clause (ii) above, and not a Force Majeure Event.
		
(d)	Deferral of Payments and Deliveries During Waiting Period. If an Illegality or a Force Majeure Event has occurred and is continuing with respect to a Transaction, each payment or delivery which would otherwise be required to be made under that Transaction will be deferred to, and will not be due until:¯	
(i) the first Local Business Day or, in the case of a delivery, the first Local Delivery Day (or the first day that would have been a Local Business Day or Local Delivery Day, as appropriate, but for the occurrence of the event or circumstance constituting or giving rise to that Illegality or Force Majeure Event) following the end of any applicable Waiting Period in respect of that Illegality or Force Majeure Event, as the case may be; or
(ii) if earlier, the date on which the event or circumstance constituting or giving rise to that Illegality or Force Majeure Event ceases to exist or, if such date is not a Local Business Day or, in the case of a delivery, a Local Delivery Day, the first following day that is a Local Business Day or Local Delivery Day, as appropriate.
		
(e)	Inability of Head or Home Office to Perform Obligations of Branch. If (i) an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or 5(b)(ii)(1) and the relevant Office is not the Affected Party’s head or home office, (ii) Section 10(a) applies, (iii) the other party seeks performance of the relevant obligation orcompliance with the relevant provision by the Affected Party’s head or home office and (iv) the Affected Party’s head or home office fails so to perform or comply due to the occurrence of an event or circumstance which would, if that head or home office were the Office through which the Affected Party makes and receives payments and deliveries with respect to the relevant Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and such failure would otherwise constitute an Event of Default under Section 5(a)(i)or 5(a)(iii)(1) with respect to such party, then, for so long as the relevant event or circumstance continues to exist with respect to both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case may be, and the Affected Party’s head or home office, such failure will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1).	
		
6.	Early Termination; Close-Out Netting	
		
(a)	Right to Terminate Following Event of Default. If at any time an Event of Default with respect to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the “Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).	
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event other than a Force Majeure Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction, and will also give the other party such other information about that Termination Event as the other party may reasonably require. If a Force Majeure Event occurs, each party will, promptly upon becoming aware of it, use all reasonable efforts to notify the other party, specifying the nature of that Force Majeure Event, and will also give the other party such other information about that Force Majeure Event as the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, other than immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party’s policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed.

(iii) Two Affected Parties. If a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice of such occurrence is given under Section 6(b)(i) to avoid that Termination Event.
(iv) Right to Terminate.
		
(1)	If:¯	
(A) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or
(B) a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party,
the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there are two Affected Parties, or the Non-affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, if the relevant Termination Event is then continuing, by not more than 20 days notice to the other party, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions.
(2) If at any time an Illegality or a Force Majeure Event has occurred and is then continuing and any applicable Waiting Period has expired:¯
(A) Subject to clause (B) below, either party may, by not more than 20 days notice to the other party, designate (I) a day not earlier than the day on which such notice becomes effective as an Early Termination Date in respect of all Affected Transactions or (II) by specifying in that notice the Affected Transactions in respect of which it is designating the relevant day as an Early Termination Date, a day not earlier than two Local Business Days following the day on which such notice becomes effective as an Early Termination Date in respect of less than all Affected Transactions. Upon receipt of a notice designating an Early Termination Date in respect of less than all Affected Transactions, the other party may, by notice to the designating party, if such notice is effective on or before the day so designated, designate that same day as an Early Termination Date in respect of any or all other Affected Transactions.
(B) An Affected Party (if the Illegality or Force Majeure Event relates to performance by such party or any Credit Support Provider of such party of an obligation to make any payment or delivery under, or to compliance with any other material provision of, the relevant Credit Support Document) will only have the right to designate an Early Termination Date under Section 6(b)(iv)(2)(A) as a result of an Illegality under Section 5(b)(i)(2) or a Force Majeure Event under Section 5(b)(ii)(2) following the prior designation by the other party of an Early Termination Date, pursuant to Section 6(b)(iv)(2)(A), in respect of less than all Affected Transactions.
		
(c)	Effect of Designation.	
(i) If notice designating an Early Termination Date is given under Section 6(a) or 6(b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 9(h)(i) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date will be determined pursuant to Sections 6(e) and 9(h)(ii).
		
(d)	Calculations; Payment Date .	
(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including any quotations, market data or information from internal sources used in making such calculations), (2) specifying (except where there are two Affected Parties) any Early Termination Amount payable and (3) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation or market data obtained in determining a Close-out Amount, the records of the party obtaining such quotation or market data will be conclusive evidence of the existence and accuracy of such quotation or market data.
(ii) Payment Date. An Early Termination Amount due in respect of any Early Termination Date will, together with any amount of interest payable pursuant to Section 9(h)(ii)(2), be payable (1) on the day on which notice of the amount payable is effective in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default and (2) on the day which is two Local Business Days after the day on which notice of the amount payable is

effective (or, if there are two Affected Parties, after the day on which the statement provided pursuant to clause (i) above by the second party to provide such a statement is effective) in the case of an Early Termination Date which is designated as a result of a Termination Event.
		
(e)	Payments on Early Termination. If an Early Termination Date occurs, the amount, if any, payable in respect of that Early Termination Date (the “Early Termination Amount”) will be determined pursuant to this Section 6(e) and will be subject to Section 6(f).	
(i) Events of Default. If the Early Termination Date results from an Event of Default, the Early Termination Amount will be an amount equal to (1) the sum of (A) the Termination Currency Equivalent of the Close-out Amount or Close-out Amounts (whether positive or negative) determined by the Non-defaulting Party for each Terminated Transaction or group of Terminated Transactions, as the case may be, and (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (2) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If the Early Termination Amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of the Early Termination Amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a Termination Event:¯
(1) One Affected Party. Subject to clause (3) below, if there is one Affected Party, the Early Termination Amount will be determined in accordance with Section 6(e)(i), except that references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and to the Non-affected Party, respectively.
(2) Two Affected Parties. Subject to clause (3) below, if there are two Affected Parties, each party will determine an amount equal to the Termination Currency Equivalent of the sum of the Close-out Amount or Close-out Amounts (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions, as the case may be, and the Early Termination Amount will be an amount equal to (A) the sum of (I) one-half of the difference between the higher amount so determined (by party “X”) and the lower amount so determined (by party “Y”) and (II) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to Y. If the Early Termination Amount is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of the Early Termination Amount to Y.
(3) Mid-Market Events. If that Termination Event is an Illegality or a Force Majeure Event, then the Early Termination Amount will be determined in accordance with clause (1) or (2) above, as appropriate, except that, for the purpose of determining a Close-out Amount or Close-out Amounts, the Determining Party will:¯
(A) if obtaining quotations from one or more third parties (or from any of the Determining Party’s Affiliates), ask each third party or Affiliate (I) not to take account of the current creditworthiness of the Determining Party or any existing Credit Support Document and (II) to provide mid-market quotations; and
(B) in any other case, use mid-market values without regard to the creditworthiness of the Determining Party.

(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because Automatic Early Termination applies in respect of a party, the Early Termination Amount will be subject to such adjustments as are appropriate and permitted by applicable law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).
(iv) Adjustment for Illegality or Force Majeure Event. The failure by a party or any Credit Support Provider of such party to pay, when due, any Early Termination Amount will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1) if such failure is due to the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or give rise to an Illegality or a Force Majeure Event. Such amount will (1) accrue interest and otherwise be treated as an Unpaid Amount owing to the other party if subsequently an Early Termination Date results from an Event of Default, a Credit Event Upon Merger or an Additional Termination Event in respect of which all outstanding Transactions are Affected Transactions and (2) otherwise accrue interest in accordance with Section 9(h)(ii)(2).
(v) Pre-Estimate. The parties agree that an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks, and, except as otherwise provided in this Agreement, neither party will be entitled to recover any additional damages as a consequence of the termination of the Terminated Transactions.

		
(f)	Set-Off. Any Early Termination Amount payable to one party (the “Payee”) by the other party (the “Payer”), in circumstances where there is a Defaulting Party or where there is one Affected Party in the case where either a Credit Event Upon Merger has occurred or any other Termination Event in respect of which all outstanding Transactions are Affected Transactions has occurred, will, at the option of the Non-defaulting Party or the Non-affected Party, as the case may be (“X”) (and without prior notice to the Defaulting Party or the Affected Party, as the case may be), be reduced by its set-off against any other amounts (“Other Amounts”) payable by the Payee to the Payer (whether or not arising under this Agreement, matured or contingent and irrespective of the currency, place of payment or place of booking of the obligation). To the extent that any Other Amounts are so set off, those Other Amounts will be discharged promptly and in all respects. X will give notice to the other party of any set-off effected under this Section 6(f).	
For this purpose, either the Early Termination Amount or the Other Amounts (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, in good faith and using commercially reasonable procedures, to purchase the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate that obligation and set off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.
Nothing in this Section 6(f) will be effective to create a charge or other security interest. This Section 6(f) will be without prejudice and in addition to any right of set-off, offset, combination of accounts, lien, right of retention or withholding or similar right or requirement to which any party is at any time otherwise entitled or subject (whether by operation of law, contract or otherwise).

7.	Transfer	
Subject to Section 6(b)(ii) and to the extent permitted by applicable law, neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:¯

(a)	a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and	
(b) a party may make such a transfer of all or any part of its interest in any Early Termination Amount payable to it by a Defaulting Party, together with any amounts payable on or with respect to that interest and any other rights associated with that interest pursuant to Sections 8, 9(h) and 11.
Any purported transfer that is not in compliance with this Section 7 will be void.

8.	Contractual Currency	
		
(a)	Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in good faith and using commercially reasonable procedures in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.	
(b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in clause (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purpose of such judgment or order and the rate of exchange at which such party is able, acting in good faith and using

commercially reasonable procedures in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party.

(c)	Separate Indemnities. To the extent permitted by applicable law, the indemnities in this Section 8 constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement.	
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made.
		
9.	Miscellaneous	
		
(a)	Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter. Each of the parties acknowledges that in entering into this Agreement it has not relied on any oral or written representation, warranty or other assurance (except as provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available to it in respect thereof, except that nothing in this Agreement will limit or exclude any liability of a party for fraud.	
(b) Amendments. An amendment, modification or waiver in respect of this Agreement will only be effective if in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations .
(i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission and by electronic messaging system), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation will be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes, by an exchange of electronic messages on an electronic messaging system or by an exchange of e-mails, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex, electronic message or e-mail constitutes a Confirmation.
		
(f)	No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege.	
(g) Headings. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement.
(h) Interest and Compensation.
(i) Prior to Early Termination. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction:¯
(1) Interest on Defaulted Payments. If a party defaults in the performance of any payment obligation, it will, to the extent permitted by applicable law and subject to Section 6(c), pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as the overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment (and excluding any period in respect of which interest or compensation in respect of the overdue amount is due pursuant to clause (3)(B) or (C) below), at the Default Rate.
(2) Compensation for Defaulted Deliveries . If a party defaults in the performance of any obligation required to be settled by delivery, it will on demand (A) compensate the other party to the extent provided for in the relevant Confirmation or elsewhere in this Agreement and (B) unless otherwise provided in the relevant Confirmation or elsewhere in this Agreement, to the extent permitted by applicable law and subject to Section 6(c), pay to the other party interest (before as well as after judgment) on an amount equal to the fair market value of that which was required to be delivered in the same currency as that amount, for the period from (and including) the originally scheduled date for delivery to (but excluding) the date of actual delivery (and excluding

any period in respect of which interest or compensation in respect of that amount is due pursuant to clause (4) below), at the Default Rate. The fair market value of any obligation referred to above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party that was entitled to take delivery.
(3) Interest on Deferred Payments . If:¯
(A) a party does not pay any amount that, but for Section 2(a)(iii), would have been payable, it will, to the extent permitted by applicable law and subject to Section 6(c) and clauses (B) and (C) below, pay interest (before as well as after judgment) on that amount to the other party on demand (after such amount becomes payable) in the same currency as that amount, for the period from (and including) the date the amount would, but for Section 2(a)(iii), have been payable to (but excluding) the date the amount actually becomes payable, at the Applicable Deferral Rate;
(B) a payment is deferred pursuant to Section 5(d), the party which would otherwise have been required to make that payment will, to the extent permitted by applicable law, subject to Section 6(c) and for so long as no Event of Default or Potential Event of Default with respect to that party has occurred and is continuing, pay interest (before as well as after judgment) on the amount of the deferred payment to the other party on demand (after such amount becomes payable) in the same currency as the deferred payment, for the period from (and including) the date the amount would, but for Section 5(d), have been payable to (but excluding) the earlier of the date the payment is no longer deferred pursuant to Section 5(d) and the date during the deferral period upon which an Event of Default or Potential Event of Default with respect to that party occurs, at the Applicable Deferral Rate; or
(C) a party fails to make any payment due to the occurrence of an Illegality or a Force Majeure Event (after giving effect to any deferral period contemplated by clause (B) above), it will, to the extent permitted by applicable law, subject to Section 6(c) and for so long as the event or circumstance giving rise to that Illegality or Force Majeure Event
continues and no Event of Default or Potential Event of Default with respect to that party has occurred and is continuing, pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as the overdue amount, for the period from (and including) the date the party fails to make the payment due to the occurrence of the relevant Illegality or Force Majeure Event (or, if later, the date the payment is no longer deferred pursuant to Section 5(d)) to (but excluding) the earlier of the date the event or circumstance giving rise to that Illegality or Force Majeure Event ceases to exist and the date during the period upon which an Event of Default or Potential Event of Default with respect to that party occurs (and excluding any period in respect of which interest or compensation in respect of the overdue amount is due pursuant to clause (B) above), at the Applicable Deferral Rate.
(4) Compensation for Deferred Deliveries. If:¯
(A) a party does not perform any obligation that, but for Section 2(a)(iii), would have been required to be settled by delivery;
(B) a delivery is deferred pursuant to Section 5(d); or
(C) a party fails to make a delivery due to the occurrence of an Illegality or a Force Majeure Event at a time when any applicable Waiting Period has expired,
the party required (or that would otherwise have been required) to make the delivery will, to the extent permitted by applicable law and subject to Section 6(c), compensate and pay interest to the other party on demand (after, in the case of clauses (A) and (B) above, such delivery is required) if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.
(ii) Early Termination. Upon the occurrence or effective designation of an Early Termination Date in respect of a Transaction:¯
(1) Unpaid Amounts. For the purpose of determining an Unpaid Amount in respect of the relevant Transaction, and to the extent permitted by applicable law, interest will accrue on the amount of any payment obligation or the amount equal to the fair market value of any obligation required to be settled by delivery included in such determination in the same currency as that amount, for the period from (and including) the date the relevant obligation was (or would have been but for Section 2(a)(iii) or 5(d)) required to have been performed to (but excluding) the relevant Early Termination Date, at the Applicable Close-out Rate.
(2) Interest on Early Termination Amounts. If an Early Termination Amount is due in respect of such Early Termination Date, that amount will, to the extent permitted by applicable law, be paid together with interest

(before as well as after judgment) on that amount in the Termination Currency, for the period from (and including) such Early Termination Date to (but excluding) the date the amount is paid, at the Applicable Close-out Rate.
(iii) Interest Calculation. Any interest pursuant to this Section 9(h) will be calculated on the basis of daily compounding and the actual number of days elapsed.
		
10.	Offices; Multibranch Parties	
		
(a)	If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to and agrees with the other party that, notwithstanding the place of booking or its jurisdiction of incorporation or organisation, its obligations are the same in terms of recourse against it as if it had entered into the Transaction through its head or home office, except that a party will not have recourse to the head or home office of the other party in respect of any payment or delivery deferred pursuant to Section 5(d) for so long as the payment or delivery is so deferred. This representation and agreement will be deemed to be repeated by each party on each date on which the parties enter into a Transaction.	
(b) If a party is specified as a Multibranch Party in the Schedule, such party may, subject to clause (c) below, enter into a Transaction through, book a Transaction in and make and receive payments and deliveries with respect to a Transaction through any Office listed in respect of that party in the Schedule (but not any other Office unless otherwise agreed by the parties in writing).
(c) The Office through which a party enters into a Transaction will be the Office specified for that party in the relevant Confirmation or as otherwise agreed by the parties in writing, and, if an Office for that party is not specified in the Confirmation or otherwise agreed by the parties in writing, its head or home office. Unless the parties otherwise agree in writing, the Office through which a party enters into a Transaction will also be the Office in which it books the Transaction and the Office through which it makes and receives payments and deliveries with respect to the Transaction. Subject to Section 6(b)(ii), neither party may change the Office in which it books the Transaction or the Office through which it makes and receives payments or deliveries with respect to a Transaction without the prior written consent of the other party.
		
11.	Expenses	
A Defaulting Party will on demand indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees, execution fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection.

12.	Notices	
		
(a)	Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner described below (except that a notice or other communication under Section 5 or 6 may not be given by electronic messaging system or e-mail) to the address or number or in accordance with the electronic messaging system or e-mail details provided (see the Schedule) and will be deemed effective as indicated:¯	
(i) if in writing and delivered in person or by courier, on the date it is delivered;
(ii) if sent by telex, on the date the recipient’s answerback is received;
(iii) if sent by facsimile transmission, on the date it is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender’s facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date it is delivered or its delivery is attempted;
(v) if sent by electronic messaging system, on the date it is received; or
(vi) if sent by e-mail, on the date it is delivered,
unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication will be deemed given and effective on the first following day that is a Local Business Day.

(b)	Change of Details. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system or e-mail details at which notices or other communications are to be given to it.	
		
13.	Governing Law and Jurisdiction	
		
(a)	Governing Law. This Agreement will be governed by and construed in accordance with the law specified in the Schedule.	
(b) Jurisdiction. With respect to any suit, action or proceedings relating to any dispute arising out of or in connection with this Agreement (“Proceedings”), each party irrevocably:¯
(i) submits:¯

(1) if this Agreement is expressed to be governed by English law, to (A) the non-exclusive jurisdiction of the English courts if the Proceedings do not involve a Convention Court and (B) the exclusive jurisdiction of the English courts if the Proceedings do involve a Convention Court; or
(2) if this Agreement is expressed to be governed by the laws of the State of New York, to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City;
(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party; and
(iii) agrees, to the extent permitted by applicable law, that the bringing of Proceedings in any one or more jurisdictions will not preclude the bringing of Proceedings in any other jurisdiction.
		
(c)	Service of Process. Each party irrevocably appoints the Process Agent, if any, specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12(a)(i), 12(a)(iii) or 12(a)(iv). Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by applicable law.	
(d) Waiver of Immunities. Each party irrevocably waives, to the extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction or order for specific performance or recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.
		
14.	Definitions	
As used in this Agreement:¯
“Additional Representation” has the meaning specified in Section 3.
“Additional Termination Event” has the meaning specified in Section 5(b).
“Affected Party” has the meaning specified in Section 5(b).
“Affected Transactions” means (a) with respect to any Termination Event consisting of an Illegality, Force Majeure Event, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event (which, in the case of an Illegality under Section 5(b)(i)(2) or a Force Majeure Event under Section 5(b)(ii)(2), means all Transactions unless the relevant Credit Support Document references only certain Transactions, in which case those Transactions and, if the relevant Credit Support Document constitutes a Confirmation for a Transaction, that Transaction) and (b) with respect to any other Termination Event, all Transactions.
“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of a majority of the voting power of the entity or person.
“Agreement” has the meaning specified in Section 1(c).
“Applicable Close-out Rate” means:¯

(a)	in respect of the determination of an Unpaid Amount:¯	
(i) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(ii) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate;
(iii) in respect of obligations deferred pursuant to Section 5(d), if there is no Defaulting Party and for so long as the deferral period continues, the Applicable Deferral Rate; and
(iv) in all other cases following the occurrence of a Termination Event (except where interest accrues pursuant to clause (iii) above), the Applicable Deferral Rate; and

		
(b)	in respect of an Early Termination Amount:¯	
(i) for the period from (and including) the relevant Early Termination Date to (but excluding) the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable:¯
(1) if the Early Termination Amount is payable by a Defaulting Party, the Default Rate;
(2) if the Early Termination Amount is payable by a Non-defaulting Party, the Non-default Rate; and
(3) in all other cases, the Applicable Deferral Rate; and
(ii) for the period from (and including) the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable to (but excluding) the date of actual payment:¯
(1) if a party fails to pay the Early Termination Amount due to the occurrence of an event or circumstance which would, if it occurred with respect to a payment or delivery under a Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and for so long as the Early Termination Amount remains unpaid due to the continuing existence of such event or circumstance, the Applicable Deferral Rate;
(2) if the Early Termination Amount is payable by a Defaulting Party (but excluding any period in respect of which clause (1) above applies), the Default Rate;
(3) if the Early Termination Amount is payable by a Non-defaulting Party (but excluding any period in respect of which clause (1) above applies), the Non-default Rate; and
(4) in all other cases, the Termination Rate.
“Applicable Deferral Rate” means:¯

(a)	for the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant payer to be a rate offered to the payer by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market;	
(b) for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the definition of Applicable Close-out Rate, the rate certified by the relevant payer to be a rate offered to prime banks by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the payer after consultation with the other party, if practicable, for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market; and
(c) for purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv), (b)(i)(3) and (b)(ii)(1) of the definition of Applicable Close-out Rate, a rate equal to the arithmetic mean of the rate determined pursuant to clause (a) above and a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount.
“Automatic Early Termination” has the meaning specified in Section 6(a).
“Burdened Party” has the meaning specified in Section 5(b)(iv).
“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs after the parties enter into the relevant Transaction.
“Close-out Amount” means, with respect to each Terminated Transaction or each group of Terminated Transactions and a Determining Party, the amount of the losses or costs of the Determining Party that are or would be incurred under then prevailing circumstances (expressed as a positive number) or gains of the Determining Party that are or would be realised under then prevailing circumstances (expressed as a negative number) in replacing, or in providing for the Determining Party the economic equivalent of, (a) the material terms of that Terminated Transaction or group of Terminated Transactions, including the payments and deliveries by the parties under Section 2(a)(i) in respect of that Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date (assuming satisfaction of the conditions precedent inSection 2(a)(iii)) and (b) the option rights of the parties in respect of that Terminated Transaction or group of Terminated Transactions.
Any Close-out Amount will be determined by the Determining Party (or its agent), which will act in good faith and use commercially reasonable procedures in order to produce a commercially reasonable result. The Determining Party may determine a Close-out Amount for any group of Terminated Transactions or any individual Terminated Transaction but, in the aggregate, for not less than all Terminated Transactions. Each Close-out Amount will be determined as of the Early Termination Date or, if that would not be commercially reasonable, as of the date or dates following the Early Termination Date as would be commercially reasonable.

Unpaid Amounts in respect of a Terminated Transaction or group of Terminated Transactions and legal fees and out-of-pocket expenses referred to in Section 11 are to be excluded in all determinations of Close-out Amounts.
In determining a Close-out Amount, the Determining Party may consider any relevant information, including, without limitation, one or more of the following types of information: ¯

(i)	quotations (either firm or indicative) for replacement transactions supplied by one or more third parties that may take into account the creditworthiness of the Determining Party at the time the quotation is provided and the terms of any relevant documentation, including credit support documentation, between the Determining Party and the third party providing the quotation;	
(ii) information consisting of relevant market data in the relevant market supplied by one or more third parties including, without limitation, relevant rates, prices, yields, yield curves, volatilities, spreads, correlations or other relevant market data in the relevant market; or
(iii) information of the types described in clause (i) or (ii) above from internal sources (including any of the Determining Party’s Affiliates) if that information is of the same type used by the Determining Party in the regular course of its business for the valuation of similar transactions.
The Determining Party will consider, taking into account the standards and procedures described in this definition, quotations pursuant to clause (i) above or relevant market data pursuant to clause (ii) above unless the Determining Party reasonably believes in good faith that such quotations or relevant market data are not readily available or would produce a result that would not satisfy those standards. When considering information described in clause (i), (ii) or (iii) above, the Determining Party may include costs of funding, to the extent costs of funding are not and would not be a component of the other information being utilised. Third parties supplying quotations pursuant to clause (i) above or market data pursuant to clause (ii) above may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors, brokers and other sources of market information.
Without duplication of amounts calculated based on information described in clause (i), (ii) or (iii) above, or other relevant information, and when it is commercially reasonable to do so, the Determining Party may in addition consider in calculating a Close-out Amount any loss or cost incurred in connection with its terminating, liquidating or re-establishing any hedge related to a Terminated Transaction or group of Terminated Transactions (or any gain resulting from any of them).
Commercially reasonable procedures used in determining a Close-out Amount may include the following:¯

(1)	application to relevant market data from third parties pursuant to clause (ii) above or information from internal sources pursuant to clause (iii) above of pricing or other valuation models that are, at the time of the determination of the Close-out Amount, used by the Determining Party in the regular course of its business in pricing or valuing transactions between the Determining Party and unrelated third parties that are similar to the Terminated Transaction or group of Terminated Transactions; and	
(2) application of different valuation methods to Terminated Transactions or groups of Terminated Transactions depending on the type, complexity, size or number of the Terminated Transactions or group of Terminated Transactions.
“Confirmation” has the meaning specified in the preamble.
“consent” includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent.
“Contractual Currency” has the meaning specified in Section 8(a).
“Convention Court” means any court which is bound to apply to the Proceedings either Article 17 of the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters or Article 17 of the 1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters.
“Credit Event Upon Merger” has the meaning specified in Section 5(b).
“Credit Support Document” means any agreement or instrument that is specified as such in this Agreement.
“Credit Support Provider” has the meaning specified in the Schedule.
“Cross-Default” means the event specified in Section 5(a)(vi).

“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum.
“Defaulting Party” has the meaning specified in Section 6(a).
“Designated Event” has the meaning specified in Section 5(b)(v).
“Determining Party” means the party determining a Close-out Amount.
“Early Termination Amount” has the meaning specified in Section 6(e).
“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).
“electronic messages” does not include e-mails but does include documents expressed in markup languages, and “electronic messaging system” will be construed accordingly.
“English law” means the law of England and Wales, and “English” will be construed accordingly.
“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule.
“Force Majeure Event” has the meaning specified in Section 5(b).
“General Business Day” means a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits).
“Illegality” has the meaning specified in Section 5(b).
“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document).
“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority), and “unlawful” will be construed accordingly.
“Local Business Day” means (a) in relation to any obligation under Section 2(a)(i), a General Business Day in the place or places specified in the relevant Confirmation and a day on which a relevant settlement system is open or operating as specified in the relevant Confirmation or, if a place or a settlement system is not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) for the purpose of determining when a Waiting Period expires, a General Business Day in the place where the event or circumstance that constitutes or gives rise to the Illegality or Force Majeure Event, as the case may be, occurs, (c) in relation to any other payment, a General Business Day in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment and, if that currency does not have a single recognised principal financial centre, a day on which the settlement system necessary to accomplish such payment is open, (d) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), a General Business Day (or a day that would have been a General Business Day but for the occurrence of an event or circumstance which would, if it occurred with respect to payment, delivery or compliance related to a Transaction, constitute or give rise to an Illegality or a Force Majeure Event) in the place specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant locations for performance with respect to such Specified Transaction.
“Local Delivery Day” means, for purposes of Sections 5(a)(i) and 5(d), a day on which settlement systems necessary to accomplish the relevant delivery are generally open for business so that the delivery is capable of being accomplished in accordance with customary market practice, in the place specified in the relevant Confirmation or, if not so specified, in a location as determined in accordance with customary market practice for the relevant delivery.

“Master Agreement” has the meaning specified in the preamble.
“Merger Without Assumption” means the event specified in Section 5(a)(viii).
“Multiple Transaction Payment Netting” has the meaning specified in Section 2(c).
“Non-affected Party” means, so long as there is only one Affected Party, the other party.
“Non-default Rate” means the rate certified by the Non-defaulting Party to be a rate offered to the Non-defaulting Party by a major bank in a relevant interbank market for overnight deposits in the applicable currency, such bank to be selected in good faith by the Non-defaulting Party for the purpose of obtaining a representative rate that will reasonably reflect conditions prevailing at the time in that relevant market.
“Non-defaulting Party” has the meaning specified in Section 6(a).
“Office” means a branch or office of a party, which may be such party’s head or home office.
“Other Amounts” has the meaning specified in Section 6(f).
“Payee” has the meaning specified in Section 6(f).
“Payer” has the meaning specified in Section 6(f).
“Potential Event of Default” means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.
“Proceedings” has the meaning specified in Section 13(b).
“Process Agent” has the meaning specified in the Schedule.
“rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency.
“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made.
“Schedule” has the meaning specified in the preamble.
“Scheduled Settlement Date” means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction.
“Specified Entity” has the meaning specified in the Schedule.
“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.
“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement with respect to any such transaction) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is not a Transaction under this Agreement but (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that

is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.
“Stamp Tax” means any stamp, registration, documentation or similar tax.
“Stamp Tax Jurisdiction” has the meaning specified in Section 4(e).
“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax.
“Tax Event” has the meaning specified in Section 5(b).
“Tax Event Upon Merger” has the meaning specified in Section 5(b).
“Terminated Transactions” means, with respect to any Early Termination Date, (a) if resulting from an Illegality or a Force Majeure Event, all Affected Transactions specified in the notice given pursuant to Section 6(b)(iv), (b) if resulting from any other Termination Event, all Affected Transactions and (c) if resulting from an Event of Default, all Transactions in effect either immediately before the effectiveness of the notice designating that Early Termination Date or, if Automatic Early Termination applies, immediately before that Early Termination Date.
“Termination Currency” means (a) if a Termination Currency is specified in the Schedule and that currency is freely available, that currency, and (b) otherwise, euro if this Agreement is expressed to be governed by English law or United States Dollars if this Agreement is expressed to be governed by the laws of the State of New York.
“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Close-out Amount is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties.
“Termination Event” means an Illegality, a Force Majeure Event, a Tax Event, a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event.
“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts.
“Threshold Amount” means the amount, if any, specified as such in the Schedule.
“Transaction” has the meaning specified in the preamble.
“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii) or due but for Section 5(d)) to such party under Section 2(a)(i) or 2(d)(i)(4) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date, (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii) or 5(d)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered and (c) if the Early Termination Date results from an Event of Default, a Credit Event Upon Merger or an Additional Termination Event in respect of which all outstanding Transactions are Affected Transactions, any Early Termination Amount due prior to such Early Termination

Date and which remains unpaid as of such Early Termination Date, in each case together with any amount of interest accrued or other
compensation in respect of that obligation or deferred obligation, as the case may be, pursuant to Section 9(h)(ii)(1) or (2), as appropriate. The fair market value of any obligation referred to in clause (b) above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it will be the average of the Termination Currency Equivalents of the fair market values so determined by both parties.
“Waiting Period” means:¯

(a)	in respect of an event or circumstance under Section 5(b)(i), other than in the case of Section 5(b)(i)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of three Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance; and	
(b) in respect of an event or circumstance under Section 5(b)(ii), other than in the case of Section 5(b)(ii)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of eight Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.

					
BANCO BILBAO VIZCAYA ARGENTARIA, S.A	 	EACH ENTITY LISTED IN EXHBIT A:	
(“Party A”)	 	(each a “Party B”)	
 	 	 	 	 	
 	 	 	LKQ CORPORATION	
 	 	 	 	 	
By: _____________________________________	/s/ KRISTEN HOLM	 	 	 	
Name:	Kristen Holm	 	By: _____________________________________	/s/ DOMNICK P. ZARCONE	
Title:	Managing Director	 	Name:	Dominick P. Zarcone	
Date:	May 26, 2016	 	Title:	Executive Vice President and Chief Financial Officer	
 	 	 	Date:	May 26, 2016	
 	 	 	 	 	
By: _____________________________________	 	 	EURO CAR PARTS LIMITED	
Name:	 	 	By: _____________________________________	/s/ JOHN QUINN	
Title:	 	 	Name:	John Quinn	
Date:	 	 	Title:	CEO & Managing Director, LKQ Europe	
 	 	 	Date:	May 26, 2016	
 	 	 	 	 	
 	 	 	KEYSTONE AUTOMOTIVE INDUSTRIES ON,	
 	 	 	By: _____________________________________	/s/ MICHAEL S. CLARK	
 	 	 	Name:	Michael S. Clark	
 	 	 	Title:	Vice President — Finance and Controller	
 	 	 	Date:	May 26, 2016	

ISDA
International Swaps and Derivatives Association, Inc.

SCHEDULE
to the
2002 Master Agreement

dated as of May 20, 2016
between

BANCO BILBAO VIZCAYA ARGENTARIA, S.A.,
a bank established under the laws of the Kingdom of Spain ,

(“Party A”)
and

Each of the entities listed in Exhibit A,

(each a “Party B”)
Part 1
Termination Provisions

(a)	“Specified Entity” means in relation to Party A for the purpose of Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v): none;	
“Specified Entity” means in relation to Party B for the purpose of Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v): none.

(b)	“Specified Transaction” will have the meaning specified in Section 14 but shall also include any transaction with respect to margin loans, cash loans and short sales of any financial instrument, and as amended by inserting the words, “or any Affiliate of Party A” immediately after “Agreement” in the second line thereof.	

(c)	The “Cross-Default” provisions of Section 5(a)(vi):	
will apply to Party A
and will apply to Party B.

provided, however, that such provision shall be amended by inserting the following after clause (2) thereof:
"provided, however, that, notwithstanding the foregoing, an Event of Default shall not occur under 5(a)(vi)(2) above if (I) the failure to pay referred to in Section 5(a)(vi)(2) is caused by an error or omission of an administrative or operational nature, (II) funds were available to such party to enable it to make the relevant payment when due and (III) such payment or delivery is made within three (3) Local Business Days following receipt of written notice from an interested party of such failure to pay."

In connection therewith, “Specified Indebtedness” will not have the meaning specified in Section 14, and such definition shall be replaced by the following: “any obligation in respect of the payment or repayment of moneys (whether present or future, contingent or otherwise, as principal or surety or otherwise), including, but without limitation, any obligation in respect of borrowed money except that such term shall not include obligations in respect of deposits received in the ordinary course of a party’s banking business.”

“Threshold Amount” means with respect to Party A an amount equal to three percent (3%) of the Shareholders’ Equity of Party A and with respect to Party B, $75,000,000.

“Credit Agreement” means the Second Amended and Restated Credit Agreement dated as of March 25, 2011, as amended and restated as of September 30, 2011, as further amended and restated as of May 3, 2013, as further amended and restated as of March 27, 2014, as further amended and restated as of January 29, 2016 among LKQ Corporation and LKQ Delaware LLP, the Subsidiary Borrowers from time to time party thereto, the Lenders party thereto from time to time, Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A., as Syndication Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Citizens Bank, N.A, as Documentation Agents, as amended, extended, supplemented, restated or otherwise modified in writing from time to time.

“Shareholders’ Equity” means with respect to an entity, at any time, the sum (as shown in the most recent annual audited financial statements of such entity) of (i) its capital stock (including preferred stock) outstanding, taken at par value, (ii) its capital surplus and (iii) its retained earnings, minus (iv) treasury stock, each to be determined in accordance with generally accepted accounting principles.

(d)	The “Credit Event Upon Merger” provisions of Section 5(b)(v):	
will apply to Party A
will apply to Party B

provided however, that “materially weaker” shall mean for any Party, Credit Support Provider or Specified Entity, as the case may be, (“X”):

(a) in the event X, immediately prior to such action, was rated by Standard and Poor’s Rating Group, a division of The McGraw-Hill Companies (“S&P”) and /or Moody’s Investors Service, Inc. (“Moody’s”) or any successor organisation and (i) S&P and/or Moody’s rates the long term, unsecured, unsubordinated debt obligations of the resulting, surviving or transferee entity immediately after such action at least three modifiers (a modifier being 1, 2, or 3 for Moody’s; plus, neutral or minus for S&P) lower than that of the long term, unsecured, unsubordinated debt obligations of X immediately prior to such action or such rating is below investment grade, being BBB- for S&P and Baa3 for Moody’s, or (ii) the resulting, surviving or transferee entity ceases to be rated by S&P and/or Moody’s immediately after such action, or

(b) in the event X, immediately prior to such action, was not rated by S&P and/or Moody’s, the creditworthiness of the resulting, surviving or transferee entity is, in the reasonable opinion of the Party which is not X, materially weaker than that of X immediately prior to such action.

For purposes hereof, X or the successor, surviving or transferee entity, as appropriate, will be the Affected Party.

(e)	The “Automatic Early Termination” provision of Section 6(a):	
will not apply to Party A
will not apply to Party B.

(f)	“Termination Currency” means United States Dollars.	

(g)	Additional Termination Event will apply.	
It shall be an Additional Termination Event hereunder, with respect to any Transactions, with respect to which Party B shall be the sole Affected Party, if (1)(a) Party’s B’s obligations under this Agreement cease or fail to be secured or guaranteed on the same terms in all relevant respects as the obligations of Party B under the Credit Agreement, (b) Party’s B’s Obligations under this Agreement cease or fail to be on a pari passu and pro rata basis under the Credit Agreement with the principal amount of the Loans (as defined in the Credit Agreement) of Party B and the Domestic Subsidiary Borrowers (as defined in the Credit Agreement), (c) an Event of Default (as defined in the Credit Agreement) occurs under the Credit Agreement, (d) the Credit Agreement shall be paid or prepaid in full, expire, terminate, or otherwise cease to be in full effect and, in any case, or (e) if a Change of Status pursuant to Part 5(w) occurs and Party B fails to notify Party A of such change, or (2) Party B fails, within five days after demand by Party A following such event described in clause (a), (b), (c) or (d) immediately above, to deliver substitute collateral reasonably satisfactory to Party A to secure Party B’s obligations under this Agreement.

Part 2
Tax Representations
		
(a)	Payer Tax Representations.  For the purpose of Section 3(e) of this Agreement, Party A and Party B will make the following representation:-	
It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 9(h) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, except that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.

		
(b)	Payee Tax Representations.  For the purpose of Section 3(f) of this Agreement, Party A and Party B will make the following representations specified below, if any:-	
		
(i)	The following representations will apply to Party A:	
It is:

(ii)	(i ) a banking corporation organized and existing under the laws of the Kingdom of Spain and has a Taxpayer ID number of A 48265169,(ii) a “foreign person” within the meaning of Section 1.6041-4(a)(4) of the United States Treasury Regulations , (iii) a “non-U.S. branch of a foreign person” within the meaning of Section 1.1441-4(a)(3), of the United States Treasury Regulations. and (iv) “U.S. branch of a foreign person” when Party A is acting through an Office or Agent located in the United States. . The following representations will apply to Party B:	
Party B is a corporation created or organized under the laws of the State of Delaware and the federal taxpayer identification number is 36-4215970.

		
(iii)	The following representation will apply to both Party A and B:	
“For purposes of Section 3(f) of this Agreement, Party A and B make the following representations: Where a Party has received or is due to receive a payment (“Payee”) from the other party (“Payer”) in connection with this Agreement and the payment was/is from one of the Payer´s office to one of the Payee´s offices and:

(a) Both such offices are not located in the same country, then the Payee will make the following representation:

It is fully eligible for the benefits of the “Business Profits” or “Industrial and Commercial Profits” provision, as the case may be, the “Interest” provision or the “Other Income” provision (if any) of the Specified Treaty with respect to any payment described in such provisions and received or to be received by it in connection with this Agreement and no such payment is attributable to a trade or business carried on by it through a permanent establishment in the Specified Jurisdiction.

If such representation applies, then:

“Specified Treaty” means, with respect to a Transaction, the double tax treaty (if any) between the country in which the Payer’s office from which the payment is made is located and the country in which the Payee is resident for taxation purposes; and

"Specified Jurisdiction” means the country in which the Payer’s office for payment in respect of the Transaction is located.

(2) Both such offices are located in the same country, then the Payee will make the following representation: Each Payment received or to be received in connection with this Agreement will be effectively connected with its conduct of a trade or business in the country in which the office for receipt of payment is located.

Part 3
Agreement to Deliver Documents

For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents:

(a) Tax forms, documents or certificates to be delivered are:

			
Party required to
deliver document	Document	Date by which to be delivered	
Party A and Party B

Party B	Any document allowing any Party to the other to make or receive payments under this Agreement without withholding or deduction on account of any Tax or with such withholding or deduction at a reduced rate.

Internal Revenue Service Form W-9 or W-8BENE (as applicable).	Upon the earlier of (i) reasonable demand by either party and (ii) learning that such form or document is required.

Upon execution and delivery of this Agreement	
(b) Other documents to be delivered are:-

	
				
Party required
to deliver
document	Form/Document/Certificate	Date by which
to be delivered	Covered by Section 3(d) Representation	
Party A and
Party B	Certified copies of all corporate, partnership or membership authorizations, as the case may be, and any other documents with respect to the execution, delivery and performance of this Agreement and any Credit Support Document	Upon execution and delivery of this Agreement	Yes	
Party A and
Party B	Certificate of authority and specimen signatures of individuals executing this Agreement and any Credit Support Document	Upon execution and delivery of this Agreement and thereafter upon request of the other party	Yes	
Party A	Annual Report of PARTY A containing audited, consolidated financial statements certified by independent certified public accountants and prepared in accordance with generally accepted accounting principles in the country in which such party is organized	Upon Request, provided however, that, with respect to Party A, such annual report shall be deemed to be delivered by Party A hereunder if on the date of such request such annual report is posted on Party A’s website at www.bbva.com.	Yes	
Party A	Quarterly Financial Statements of PARTY A containing unaudited, consolidated financial statements of such party’s fiscal quarter prepared in accordance with generally accepted accounting principles in the country in which such party is organized	To be made available on www.bbva.com as soon as available and in any event within 45 days after the end of each fiscal quarter of Party A	 	
Party B	Annual Report of Party B and of any Credit Support Provider thereof containing audited, consolidated financial statements certified by independent certified public accountants and prepared in accordance with generally accepted accounting principles in the country in which such party and such Credit Support Provider is organized	To be made available on www.lkqcorp.com as soon as available and in any event within 90 days after the end of each fiscal year of Party B and of the Credit Support Provider	Yes	
Party B	Quarterly Financial Statements of Party B and any Credit Support Provider thereof containing unaudited, consolidated financial statements of such party’s fiscal quarter prepared in accordance with generally accepted accounting principles in the country in which such party and such Credit Support Provider is organized	To be made available on www.lkqcorp.com as soon as available and in any event within 45 days after the end of each fiscal quarter of Party B and of the Credit Support Provider	Yes	

Part 4
Miscellaneous

(a)	Address for Notices.  For the purpose of Section 12(a) of this Agreement:-	
Address for notice or communications to Party A:
Address: Clara del Rey 26, 2ª Planta - 28002-Madrid
Attention: Treasury - Documentation
Facsimile: 91 537 09 55 (Confirmations)
      91 537 05 79 (Notification)

Email as electronic messaging system (for confirmation purposes): docderiv@grupobbva.com
Email as electronic messaging system (for fixing notifications): C014382V@grupobbva.com

Address for portfolio data, discrepancy notices and dispute notices for the purposes of Risk Mitigation Techniques (as defined in Part 7(e)). Any notice shall only deem to be received upon receipt at the below-mentioned addresses:

-Portfolio data: portfolio.reconciliations.corp@bbva.com
-Notice of a discrepancy: portfolio.reconciliations.corp@bbva.com
-Dispute notice: portfolio.reconciliations.corp@bbva.com

Address for Change of Status Notice Address for the purposes of Part 7(d)(2). Any notice shall only deem to be received upon receipt at the below-mentioned address:

- Change of Status Notice: client.regulatory.services.es@bbva.com

Address for notice or communications to Party B:

Address:          LKQ Corporation
500 West Madison Street, Suite 2800
Chicago, IL 60661
Attention: Jack B. Brooks

Telephone No.:      312/621-2774
Facsimile No.:      866/669-2811
Email Address:      jbbrooks@lkqcorp.com

with a copy to:

Address:          LKQ Corporation
500 West Madison Street, Suite 2800
Chicago, IL 60661
Attention: Victor Casini
Telephone No.:      312/621-2754
Facsimile No.:          312/280-3730
Email Address:      victorcasini@ lkqccorp.com

		
(b)	Process Agent.  For the purpose of Section 13(c):	

Party A appoints as its Process Agent:
Banco Bilbao Vizcaya Argentaria, S.A. New York Branch
1345 Avenue of the Americas, 44th floor, New York, NY 10105

Party B appoints as its Process Agent: Not applicable for LKQ Corporation, for any other Party B formed or organized under the laws of a State of the United States of America Corporate Creations Network Inc., 15 North Mill Street, Nyack, New York 10960 for any Party B that is not formed or organized under the laws of a State of the United States of America.

(c)	Offices.  The provisions of Section 10(a) will apply to this Agreement.	

(d)	Multibranch Party.  For the purpose of Section 10(b) of this Agreement:-	
Party A is a Multibranch Party and may enter into a Transaction through any of the following Offices:
Banco Bilbao Vizcaya Argentaria, S.A. (Madrid Head Office)
Address: Clara del Rey 26, 2ª Planta - 28002-Madrid
Attention: Treasury - Documentation
Facsimile: 91 537 09 55 (Confirmations)
91 537 05 79 (Notices)
Telephone: 34 91 374 83 21
Swift code: BBVAESMMFXD

(For all purposes and acting through its Madrid Head Office)
Banco Bilbao Vizcaya Argentaria, S.A. London Branch     
One Canada Square, 44th Floor, London E14 5AA
Attention: Swaps Administration
Facsimile: 44 171 929 4718     
Telephone: 44 171 623 3060

(Only when acting through its London Branch).
Banco Bilbao Vizcaya Argentaria, S.A. New York Branch
1345 Avenue of the Americas, 44th floor
New York, NY 10105
Attention: Swaps Administration
Facsimile: 212.728.1636; 212.728.1607
Telephone: 212.333.2901

(Only when acting through its New York Branch).
Party B is not a Multibranch Party.

(e)	Calculation Agent.  The Calculation Agent is Party A.	

		
(f)	Credit Support Document.  Details of any Credit Support Document:-	
Each of the following, as amended, extended, supplemented or otherwise modified in writing from time to time, is a “Credit Support Document”:
In relation to Party B:
1) The Guaranty from LKQ Corporation for the benefit of each Party B in Exhibit A (as applicable); and
2) the Credit Agreement, and the Security Documents, or the Collateral Documents, as the case may be, as defined in the Credit Agreement.
Party B agrees that the security interests in collateral granted to Party A under the foregoing Credit Support Documents shall secure the obligations of Party B to Party A under this Agreement.

(g)	Credit Support Provider.	
Credit Support Provider means in relation to party A: Not applicable.
Credit Support Provider means in relation to Party B: LKQ Corporation (as applicable in Exhibit A) and Subsidiary Borrowers and Subsidiary Guarantors, each as defined in the Credit Agreement, excluding, however, any Subsidiary, as defined in the Credit Agreement, that would become an Affected Foreign Subsidiary, as defined in the Credit Agreement, if it guaranteed or became liable for, or granted any security interests to secure, the obligations under this Agreement or any Transaction.

(h)	Governing Law.  This Agreement and any and all controversies arising out of or in relation to this Agreement shall be governed by and construed in accordance with the laws of the State of New York (without reference to its conflict of laws doctrine).	

(i)	Netting of Payments.  Section 2(c)(ii) of this Agreement shall apply; provided that either party may cause payments due on the same day in the same currency (between the same Offices) but under different Transactions to be discharged and replaced with a single, netted payment obligation by providing the other party with a written statement detailing the calculation of such net amount payable not later than three Business Days prior to the relevant due date.	
		
(j)	“Affiliate” will have the meaning specified in Section 14 of this Agreement.	

(k)	Absence of Litigation.  For the purpose of Section 3(c):-	
“Specified Entity” means in relation to Party A, none;
“Specified Entity” means in relation to Party B, none.

(l)	No Agency.  The provisions of Section 3(g) will apply to this Agreement.	

(m)	Additional Representation will apply. For the purpose of Section 3 of this Agreement, each of the following will constitute an Additional Representation:-	

(i)	Relationship Between Parties.  Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):-	

(1)	Non-Reliance.  It is acting for its own account, and, it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate	

or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction, it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party will be deemed to be an assurance or guarantee as to the expected results of that Transaction.

(2)	Assessment and Understanding.  It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction.	

(3)	Status of Parties.  The other party is not acting as a fiduciary for or an advisor to it in respect of that Transaction.	

(ii)	Each party makes the representations below (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into):	

(1)	Eligible Contract Participant.  Each party will be deemed to represent to the other party on each date on which a Transaction is entered into that it is an “eligible contract participant” and that each guarantor of its Swap Obligations (as defined below), if any, is an “eligible contract participant,” as such term is defined in the U.S. Commodity Exchange Act, as amended.  For purposes of this provision, “Swap Obligation” means an obligation incurred with respect to a transaction that is a “swap” as defined in the Section 1a(47) of the Commodity Exchange Act and CFTC Regulation 1.3(xxx) .	

(2)	Line of Business . It has entered into this Agreement (including each Transaction evidenced hereby) in conjunction with its line of business (including financial intermediation services) or the financing of its business. It represents and warrants that all transactions effected under this Agreement (a) will be appropriate in the conduct and management of its business, (b) will be entered into for non-speculative purposes, and (c) as to Party B, Party B represents that all Transactions effected under this Agreement constitute transactions entered into for purposes of hedging or managing risks related to its assets or liabilities as currently owned or incurred, or likely to be owned or incurred in the conduct of its business.	

(n)	Recording of Conversations.  Each party to this Agreement acknowledges and agrees to the recording of conversations and to obtain any necessary consent of, and give any necessary notice of such recording from and between trading and marketing personnel of the parties to this Agreement whether by one or other or both of the parties or their agents.	
ts.

Part 5
Other Provisions

(a)	Financial Statements.  Section 3(d) is hereby amended by adding in the third line thereof after the word “respect” and before the period:	
“or, in the case of financial statements, a fair presentation of the financial condition of the relevant party.”

(b)	2002 Master Agreement Protocol . Annexes 1 to 18 and Section 6 of the ISDA 2002 Master Agreement Protocol as published by the International Swaps and Derivatives Association, Inc. on July 15, 2003 are incorporated into and apply to this Agreement. References in those definitions and provisions to any ISDA Master Agreement will be deemed to be references to this Master Agreement.	
		
(c)		
WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY CREDIT SUPPORT DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
		
(d)		
Method of Notice.  Section 12(a)(ii) of the Master Agreement is deleted in its entirety.
		
(e)		
Safe Harbors.  Each party to this Agreement acknowledges that:
		
(i)	This Agreement, including any Credit Support Document, is a “master netting agreement” as defined in the U.S. Bankruptcy Code (the “Code” ), and this Agreement, including any Credit Support Document, and each Transaction hereunder is of a type set forth in Section 561(a)(1)-(5) of the Code;	
		
(ii)	Party A is a “master netting agreement participant,” a “financial institution,” a “financial participant,”‘ a “forward contract merchant” and a “swap participant” as defined in the Code, All transfers of cash, securities or other property under or in connection with this Agreement, any Credit Support Document or any Transaction hereunder are “margin payments,” “settlement payments” and “transfers” under Sections 546(c), (f), (g) or (j), and under Section 548(d)(2) of the Code; and	
		
(iii)	Each obligation under this Agreement, any Credit Support Document or any Transaction hereunder is an obligation to make a “margin payment,” “settlement payment” and “payment” within the meaning of Sections 362, 560 and 561 of the Code.	
		
(f)		
Hedge Agreement.  Party B represents to Party A (which representation will be deemed to be repeated by Party B on each date on which a Transaction is entered into) that this Agreement is a Hedge Agreement as defined in the Credit Agreement.
		
(g)		
Withholding Tax Imposed on Payments to Non-U.S. Counterparties under the United States Foreign Account Tax Compliance Act . (a) For purposes of any Payer Tax Representation, the words “any Tax from any payment” shall not include any tax imposed under Sections 1471 and 1472 of the Internal Revenue Code of 1986, as amended (or the United States Treasury regulations or other guidance issued or any agreements entered into thereunder) (“FATCA Withholding Tax”); (b) for the avoidance of doubt the parties agree that for purposes of Section 2(d) of this Agreement the deduction or withholding of FATCA Withholding Tax is required by applicable law; and (c) the definition of “Indemnifiable Tax” shall not include any FATCA Withholding Tax

(h)	Timely Confirmation Amendment	

(a)      Section 9(e)(ii) of the Agreement is hereby amended by deleting the clause in its entirety and substituting the following in lieu thereof:
(ii)      The Parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation will be entered into as soon as possible and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes, by an exchange of electronic messages on an electronic messaging system or by an exchange of e-mails or, if agreed by the Parties, the Documenting Party will be entitled to make available to the Receiving Party the Confirmations in a webpage to which the Receiving Party has access through a personalized code and/or electronic signature, or by other method intended by the parties to be effective for the purpose of confirming or evidencing such Transaction, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex, electronic message or e-mail constitutes a Confirmation.
(b)      When the Parties have entered into a Transaction through an oral agreement concluded over the telephone and, despite that a legally binding agreement exists from the moment the parties agree (whether orally or otherwise) on the terms of the Transaction, in compliance with EMIR the Parties have the obligation to confirm the Transactions within the time limits stipulated in EMIR and any Supplementing Regulation that will depend on the type of counterparty, the type of Transaction and the Trade Date (the “ Specified Time Limit ”).
With the purpose of complying with the obligations imposed by EMIR within the Specified Time Limit, the Parties agree on the following:
(i)      Email will be considered to be an appropriate way to send the Confirmations by the Documenting Party, being valid any email address provided by the Receiving Party in the Master Agreement, Confirmations or any other documents or communications for this purpose. Additionally, if agreed by the Parties, the Documenting Party will be entitled to make available to the Receiving Party the Confirmations in a webpage to which the Receiving Party has access through a personalized code and/or electronic signature.
(ii)      The Documenting Party will draft the Confirmation/s and will, send it/them or make it/them available to the Receiving Party as soon as possible. Once the Confirmation sent by the Documenting Party has been received, and once the terms contained therein have been reviewed, the Receiving Party, will:
1. validate electronically, by email, fax or, as the case may be, return the Confirmation duly signed to the Receiving Party; or
2. communicate to the Delivery Party any discrepancies or mistakes detected, in which case both Parties undertake to make their best efforts in order to solve the discrepancies identified and confirm the Transaction as soon as possible.

For the purpose of this Provision, the “Specified Time Limit” will be split into two halves, so that the Documenting Party has the first half of the Specified Time Limit to comply with its obligations and, the Receiving Party will have the second half of the Specified Time Limit to comply with its own obligations.

For the purpose of complying with EMIR, the Parties agree that once the Specified Time Limit has elapsed without having the Receiving Party expressed its disagreement, the Transaction (or, as the case may be, the amendment or cancellation of any Transactions) will be considered to have been confirmed in the terms sent by Documenting Party, unless manifest error. Notwithstanding the aforementioned, if the Documenting Party exceeds the period of time it has in order to prepare and send or make available to the other Party the Confirmation (i.e. half of the Specified Time Limit), the Transaction will not be considered to be confirmed until the same period since the Confirmation was available to/received by the Receiving Party has elapsed. All the foregoing is without prejudice to the commitment of the Parties to make their best efforts to expressly confirm the Transactions (or, as the case may be, the amendment or cancelation of any Transactions) by any means agreed and within the Specified Time Limit.
For the purpose of determining the date of receipt of the Confirmation Section 12 of the ISDA Master Agreement will apply.
Without prejudice to other liabilities in which it may incur, failure by the Documenting Party to comply with its obligations under this provision shall not constitute an Event of Default or a Termination Event.

		
(i)	Only ECPs Can Be Guarantors.  Notwithstanding anything to the contrary in this Agreement or in any credit agreement or guaranty, no person providing a guaranty of any obligation of Party B under this Agreement (each such person, a “Guarantor”) shall be deemed to be a guarantor of, or to have granted a security interest to secure any guaranty by Guarantor of, any Swap Obligation (as defined below) if such Guarantor is not an “Eligible Contract Participant” as defined in the Commodity Exchange Act and the applicable rules and regulations issued by the Commodity Futures Trading Commission and/or the Securities and Exchange Commission (collectively, and as now or hereafter in effect, “the ECP Rules”) at the time Party B entered into any applicable Transaction (each such Swap Obligation, an “Excluded Swap Obligation”), but solely to the extent that the providing of such guaranty by such Guarantor, or grant of a security interest to secure any guaranty by Guarantor, of any Swap Obligation by such Guarantor would violate the ECP Rules or other applicable law or regulation. Except as expressly set forth in the preceding sentence, nothing in this Agreement shall be deemed to restrict, reduce or waive any obligation of any such Guarantor under any guaranty or other Credit Support Document, and such guaranty or other Credit Support Document shall continue to guarantee, or grant a security interest to secure, as applicable, in accordance with its terms, each Swap Obligation that is not an Excluded Swap Obligation.	
The term “ Swap Obligation ” means any obligation of any person to pay or perform under any Transaction that constitutes a “swap” as defined in the Commodity Exchange Act.

(j)	USA PATRIOT Act Notice.  Party A hereby notifies Party B that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies Party B, which information includes the name and address of Party B and other information that will allow Party A to identify Party B in accordance with the Act.	

(k)	Dodd-Frank Reporting. The parties hereby agree that, as between Party A and Party B, Party A shall be responsible for all reporting of the terms of each Transactions required pursuant to 17 C.F.R. 43 and 17 C.F.R. 45 (the “CFTC Swap Reporting Requirements”). Party A shall act as, and assume all obligations of, the “Reporting Party” (within the meaning of such term as set forth in 17 C.F.R. 43.2)	

arising under 17 C.F.R. 43 and shall act as, and shall assume all obligations of, the “reporting counterparty” (within the meaning of such term as set forth in 17 C.F.R. 45.2) arising under 17 C.F.R. 45. Party A covenants and agrees that it shall report the terms of each Transactions at the times, and in the manner, required under the CFTC Swap Reporting Requirements.

(l)	ISDA Dodd Frank Protocols.   If, prior to the date hereof, both parties have adhered to the ISDA August DF Protocol Agreement, as published on August 13, 2012, by ISDA (the “August Protocol Agreement”), the ISDA March 2013 DF Protocol Agreement, as published on March 22, 2013, by ISDA (the “March Protocol Agreement”), or both, and have delivered “Matched Questionnaires” (as defined in the August Protocol Agreement and March Protocol Agreement, as applicable), the parties hereto agree that this Master Agreement shall be supplemented to the same extent as if it were a "Matched PCA" under the August Protocol Agreement and March Protocol Agreement, as applicable.	
		
(m)		
Definitions. This Agreement incorporates, and is subject to, the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. (the “Definitions”). In respect of FX Transactions and Currency Options (each as defined in the 1998 ISDA FX and Currency Options Definitions, as published by the International Swaps and Derivatives Association, Inc. (the “FX Definitions”)) only, the definitions and provisions contained in the FX Definitions will be incorporated into this Agreement. The 2005 ISDA Commodity Definitions as published by the International Swaps and Derivatives Association, Inc. and otherwise as amended, supplemented or modified from time to time (the “Commodity Definitions”), are also incorporated by reference in this Agreement.
In the event of any inconsistency between any of the following documents in respect of a relevant transaction, the relevant document first listed below shall govern: (i) a Confirmation; (ii) the Schedule; (iii) the relevant Product ISDA Definitions; (iv) the Definitions; and (v) the printed form of the ISDA Master Agreement.
“Product ISDA Definitions”: means any definitions published by ISDA by product type (otherwise as amended, supplemented or modified from time to time) that are, or may be, incorporated by reference to this Agreement from time to time.

(n)	Section 2(a)(iii): An amendment to Section 2(a)(iii) is made by adding the following new sections:	

(iv)      If an Event of Default or Potential Event of Default has occurred and is continuing in relation to a party (“X”), then the condition precedent specified in Section 2(a)(iii)(1) will cease to be a condition precedent to each obligation of the other party (“Y”) under Section 2(a)(i) on the “Condition End Date”, being the first Local Business Day following the date falling 90 days after the first date on which Y does not make a payment or delivery otherwise due from it (after the application of Section 2(c)) in reliance on the condition precedent in Section 2(a)(iii)(1) following the occurrence of the relevant Event of Default or Potential Event of Default, unless a subsequent Event of Default or Potential Event of Default has occurred in relation to X and is continuing, in which case the Condition End Date will be the first Local Business Day following the date falling 90 days after the first due date on which Y does not make a payment or delivery otherwise due from it (after the application of Section 2(c)) in reliance on the condition precedent in Section 2(a)(iii)(1) following the occurrence of each subsequent Event of Default or Potential Event of Default.
 
(v)      For the avoidance of doubt, Section 2(a)(iii) applies to each obligation of each party under Section 2(a)(i), after the application of Section 2(c).

(vi)      For the avoidance of doubt, if the condition precedent in Section 2(a)(iii)(1) is not satisfied with respect to a party (“X”) when an obligation of the other party (“Y”) would (but for such condition

precedent) become payable or deliverable to X under Section 2(a)(i), then the obligation of Y will become payable or deliverable on the first to occur of (A) the date on which all applicable conditions precedent to such obligation under Section 2(a)(iii) are satisfied, (B) the Condition End Date or (C) the date on which all applicable conditions precedent cease to apply under any other provision of this Agreement.

(o)	Fully Paid Transactions. The condition precedent in Section 2 (a) (iii) (1) does not apply to a payment and delivery due to a party if such party shall have satisfied in full all its payment or delivery obligations under Section 2 (a) (i) of this Agreement and shall at the relevant time have no future payment obligations, whether absolute or contingent, under Section 2 (a) (i).	

(p)	Change of Account: Section 2 (b) of this Agreement is hereby amended by the insertion of the following at the end thereof after the word “change”:-	
“; provided that if such new account shall not be in the same jurisdiction having the power to tax as the original account, the party not changing its account shall not be obliged to pay any greater amounts and shall not receive less as a result of such change than would have been the case if such change had not taken place.”

(q)	Definitions: Section 14 of the Agreement is hereby completed by the insertion of the following terms:	
"Balancing Payment Amount" means, with respect to a Relevant Clearable Transaction, the amount, if any, required to be paid between the parties (which, for the avoidance of doubt, may be payable by or to a Change of Status Party) in order to reflect the difference between (1) the pricing of the Relevant Clearable Transaction by reference to the terms of such Relevant Clearable Transaction immediately prior to any amendments or modifications agreed by the parties pursuant to Part 5(16)(3)(1)(A)(I) below and (2) the pricing of the Relevant Clearable Transaction by reference to the terms of such Relevant Clearable Transaction immediately following any amendments or modifications agreed between the parties pursuant to Part 5(16)(3)(1)(A)(I) below.
"Balancing Risk Mitigation Payment Amount" means, with respect to a Relevant Non-Clearable Transaction, the amount, if any, required to be paid between the parties (which, for the avoidance of doubt, may be payable by or to a Change of Status Party) in order to reflect the difference between (1) the pricing of the Relevant Non-Clearable Transaction by reference to the terms of such Relevant Non-Clearable Transaction immediately prior to any amendments or modifications agreed by the parties pursuant to Part 5(16)(3)(1)(B)(I) below and (2) the pricing of the Relevant Non-Clearable Transaction by reference to the terms of such Relevant Non-Clearable Transaction immediately following any amendments or modifications agreed between the parties pursuant to Part 5(16)(3)(1)(B)(I) below.
"CCP" means a central clearing house authorised under Article 14 of EMIR or recognised under Article 25 of EMIR.
"CCP Service" means in respect of a CCP, an over-the-counter derivative clearing service offered by such CCP.
"Change of Status” means that the Status Representation proves to have been incorrect or misleading in any material respect (or deemed repeated) by such Party.
“Change of Status Party" means a Party in respect of which the Status Representation proves to have been incorrect or misleading in any material respect when made (or deemed repeated) by such Party.

"Cleared" means, in respect of a Transaction, that such Transaction has been submitted (including where details of such Transaction are submitted) to a CCP for clearing in a relevant CCP Service and that such CCP has become a party to a resulting or corresponding transaction, as applicable.
"Commission" means the executive body of the European Union which is responsible for proposing legislation, implementing decisions, upholding the European Union's treaties and the day-to-day running of the European Union.
“Documenting Party” means Banco Bilbao Vizcaya Argentaria, S.A.
"EMIR" means Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories dated 4 July 2012.
"ESMA" means the European Securities and Markets Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council.
"European Union" means the economic and political union established in 1993 by the Maastricht Treaty, with the aim of achieving closer economic and political union between member states that are primarily located in Europe.
"Receiving Party" means the Counterparty.
"Relevant Non-Clearable Transaction Risk Mitigation Deadline Date" means the later of (1) the sixth Business Day following the date on which both parties are aware that the Status Representation in Part 5 (16) was incorrect or misleading in any material respect when made (or deemed repeated) by a Party and (2) the last day of any transitional period provided in published official guidance, if any, from ESMA or the Commission in respect of the implementation of the relevant Risk Mitigation Techniques following the Change in Status from an entity not subject to the clearing obligation pursuant to EMIR to an entity subject to the clearing obligation pursuant to EMIR.
"Relevant Transaction Clearing Deadline Date" means the date by which the Relevant Transaction is, or was, required to be Cleared under and in accordance with EMIR.
"Risk Mitigation Techniques" means the risk mitigation techniques for OTC derivative transactions set out in Article 11 of EMIR as supplemented by Chapter VIII of the Commission Delegated Regulation (EU) No 149/2013 published 23 February 2013 in the Official Journal of the European Union.
"Third party service provider" refers to an entity that the parties agree will perform all or part of the actions under the relevant provision for both parties.

(r)	[Intentionally Omitted]	

(s)	Confidentiality Waiver	

(t)	Notwithstanding anything to the contrary in this Agreement or in any non-disclosure, confidentiality or other agreement between the parties, each party hereby consents to the disclosure of information:	
(1)      to the extent required or permitted under, or made in accordance with, the provisions of EMIR and any applicable supporting law, rule or regulation (" EMIR and Supporting Regulation ") which mandate reporting and/or retention of transaction and similar information or to the extent required or permitted under, or made in accordance with, any order or directive in relation to (and including)

EMIR and Supporting Regulation regarding reporting and/or retention of transaction and similar information issued by any authority or body or agency in accordance with which the other party is required or accustomed to act (" Reporting Requirements "); or
(2)      to and between the other party's head office, branches or Affiliates, or any persons or entities who provide services to such other party or its head office, branches or Affiliates, in each case, in connection with such Reporting Requirements.
Each party acknowledges that pursuant to EMIR and Supporting Regulation, regulators require reporting of trade data to increase market transparency and enable regulators to monitor systemic risk to ensure safeguards are implemented globally.
Each party further acknowledges that disclosures made pursuant hereto may include, without limitation, the disclosure of trade information including a party's identity (by name, address, corporate affiliation, identifier or otherwise) to any trade repository registered in accordance with Article 55 of EMIR or recognised in accordance with Article 77 of EMIR or one or more systems or services operated by any such trade repository (" TR ") and any relevant regulators (including without limitation, the European Securities and Markets Authority and national regulators in the European Union) under EMIR and Supporting Regulation and that such disclosures could result in certain anonymous transaction and pricing data becoming available to the public. Each party further acknowledges that, for purposes of complying with regulatory reporting obligations, a party may use a third party service provider to transfer trade information into a TR and that a TR may engage the services of a global trade repository regulated by one or more governmental regulators. Each party also acknowledges that disclosures made pursuant hereto may be made to recipients in a jurisdiction other than that of the disclosing party or a jurisdiction that may not necessarily provide an equivalent or adequate level of protection for personal data as the counterparty’s home jurisdiction. For the avoidance of doubt, (i) to the extent that applicable non-disclosure, confidentiality, bank secrecy, data privacy or other law imposes non-disclosure requirements on transaction and similar information required or permitted to be disclosed as contemplated herein but permits a party to waive such requirements by consent, the consent and acknowledgements provided herein shall be a consent by each party for purposes of such law; (ii) any agreement between the parties to maintain confidentiality of information contained in this Agreement or in any non-disclosure, confidentiality or other agreement shall continue to apply to the extent that such agreement is not inconsistent with the disclosure of information in connection with the Reporting Requirements as set out herein; and (iii) nothing herein is intended to limit the scope of any other consent to disclosure separately given by each party to the other party.
The consenting party represents and warrants that any third party to whom it owes a duty of confidence in respect of the information disclosed has consented to the disclosure of that information.

(u)	Remedies for Breach	
Without prejudice to the rights, powers, remedies and privileges provided by law, any inaccuracy of the representation and warranty in the Confidentiality Waiver provision set forth in Part 5 clause (13) will not constitute an Event of Default or Termination Event in respect of such party.

(v)	Notices	
Section 12(a) of the Agreement is hereby amended by deleting the clause in its entirety and substituting the following in lieu thereof:

Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner described below (except that a notice or other communication under Section 5 or 6 may not be given by electronic system or e-mail) to the address or number in accordance with the electronic messaging system or e-mail details provided (see the Schedule) and will be deemed effective as indicated:

•	if in writing and delivered in person or by courier, on the date it is delivered;	
		
•	if sent by telex, on the date the recipient’s answerback is received;	
		
•	if sent by facsimile transmission, on the date it is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by transmission report generated by the sender’s facsimile machine):	
		
•	if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date it is delivered or its delivery attempted;	
		
•	if sent by electronic messaging system, on the date it is received;	
		
•	if sent by email, on the date it is delivered; or	
		
•	if made available in a webpage to which the Parties have access through a personalized code and/or electronic signature, on the date it is uploaded	
unless the date of delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication will be deemed given and effective on the first following day that is a Local Business Day.

(a)	Status Representation	
(1)      Both Parties acknowledge that their obligations may change due to their relevant status under EMIR and, consequently, each Party must represent to the other which of the following status a), b), c) or d) is applicable for the relevant Party in connection with EMIR (“ Status ”):
a) FC : it is a Financial Counterparty (as such term is defined in EMIR); or (ii) an entity established outside the European Union that would constitute a Financial Counterparty if it were established in the European Union; and therefore, it is subject to the obligations set forth in EMIR for this kind of entities.
b) NFC -:
1)      it is either (A) a Non-Financial Counterparty (as such term is defined in EMIR) or (B) an entity established outside the European Union that, to the best of its knowledge and belief, having given due and proper consideration to its status, would constitute a Non-Financial Counterparty if it were established in the European Union; and
2)      it is not subject to a clearing obligation pursuant to EMIR (or, in respect of an entity under subparagraph (1)(b)(1)(B) above, would not be subject to the clearing obligation if it were established in the European Union) in respect of such Transaction. For the purposes of this subparagraph (1)(b)(2) of this representation, it is assumed that the Transaction is of a type that has been declared to be subject to the clearing obligation in accordance with Article 5 of EMIR and is subject to the clearing obligation in accordance with Article 4 of EMIR (whether or not in fact this is the case), and that any transitional provisions in EMIR are ignored.

c) NFC+ :
1)      It is either (A) a Non Financial Counterparty; or (B) an entity established outside the European Union that, to the best of its knowledge and belief, having given due and proper consideration to its status, would constitute a Non Financial Counterparty if it were established in the European Union; and
2)      It is subject to the clearing obligation pursuant to EMIR (or in respect of an entity under subparagraph (1)(c)(1)(B) above, would be subject to the clearing obligation if it were established in the European Union) in respect of such Transaction. For the purposes of this subparagraph (1)(c)(2) of this representation, it is assumed that the Transaction is of a type that has been declared to be subject to the clearing obligation in accordance with Article 5 of EMIR and is subject to the clearing obligation in accordance with Article 4 of EMIR (whether or not in fact this is the case), and that any transitional provisions in EMIR are ignored.
d) Exempted Counterparty : It is an entity of the kind foreseen in article 1.4 (as completed by the Commission pursuant to 1.6 EMIR) or 1.5 EMIR and, therefore, it is exempted from the obligations imposed by EMIR.
For this purpose:
Each Party B represents to Party A on each date and at each time on which it enters into a Transaction (which representation will be, subject to subparagraph (2) Status and Change of Status below, deemed to be repeated by each Party B at all times while such Transaction remains outstanding) that it is a NFC-.
Party A represents to Party B on each date and at each time on which it enters into a Transaction (which representation will be, subject to subparagraph (2) below, deemed to be repeated by BBVA at all times while such Transaction remains outstanding) that it is a FC.
(2)      Status and Change of Status
If a Change of Status occurs, the Change of Status Party shall notify it the other Party immediately and no later than the following Local Business Day (the “Change of Status Notification ”). The Change of Status Notification will be delivered to the address details set out in Part 4(a) above in the manner set out in Section 12(a) of the Agreement, even though the information regarding the Change of Status is available in a public or private source. The Change of Status Notification will contain the new Status Representation of the Change of Status Party and the date in which the Change of Status became or will become effective.
(3)      Effects of a Change of Status
1.      If the Status Representation in subparagraph (1) above proves to have been incorrect or misleading in any material respect when made (or deemed repeated) by a Party, the parties will use all reasonable efforts, negotiating in good faith and a commercially reasonable manner, to:
A)      If the Change of Status implies that a Transaction which was not subject to the clearing obligation set forth in Article 4 of EMIR becomes subject to such clearing obligation (the “ Relevant Clearable Transaction ”): if the Relevant Transaction Clearing Deadline Date has not occurred, (I) agree, implement and apply any amendments or modifications to the terms of such Relevant Clearable Transaction and/or to take any steps, as applicable, to ensure that such Relevant Clearable Transaction

is Cleared by the Relevant Transaction Clearing Deadline Date, including any amendments, modifications and/or steps, as applicable, to ensure the payment of any Balancing Payment Amount under Part 5 (16)(3)(1)(A)(II); and (II) agree the Balancing Payment Amount, if any, payable between the parties and the date on which any such Balancing Payment Amount is to be paid; and

B)      1. If the Change of Status implies that a Transaction which was subject to the clearing obligation set forth in Article 4 of EMIR ceases to be subject to such clearing obligation (the “ Relevant Non-Clearable Transaction ”): (I) agree, implement and apply any amendments or modifications to the terms of any Relevant Non-Clearable Transaction, or to any related processes, and/or to take any steps to ensure that the relevant Risk Mitigation Techniques are adhered to in respect of each such Relevant Non-Clearable Transaction from, and including, the Relevant Non-Clearable Transaction Risk Mitigation Deadline Date, including any amendments, modifications and/or steps, as applicable, to ensure the payment of any Balancing Risk Mitigation Payment Amount under Part 5 (16)(3)(1)(B)(II); and (II) agree the Balancing Risk Mitigation Payment Amount, if any, payable between the parties and the date on which any such Balancing Risk Mitigation Payment Amount is to be paid.
2.      If:
A)      subject to subparagraph (3)(5) below, any Relevant Clearable Transaction is not Cleared by the Relevant Transaction Clearing Deadline Date (including, without limitation, as a result of the Relevant Transaction Clearing Deadline Date occurring before the date on which both parties are aware that the Status Representation in respect of such Relevant Clearable Transaction was incorrect or misleading in any material respect); or
B)      the Risk Mitigation Techniques are not adhered to in respect of any Relevant Non-Clearable Transaction by the Relevant Non-Clearable Transaction Risk Mitigation Deadline Date,

(b)	it will constitute an Additional Termination Event in respect of which (I) such Relevant Transaction(s) will be the sole Affected Transaction(s); and (II) the Change of Status Party will be the sole Affected Party pursuant to Section 6 of the Agreement.	
3.      Without prejudice to the rights, powers, remedies and privileges provided by law, neither the making by a party of an incorrect or misleading Status Representation nor the failure of a party to take any actions required by subparagraph (3)(1) to negotiate in good faith and a commercially reasonable manner will constitute an Event of Default under the Agreement.
4.      Failure by a party, for whatever reason, to take any action required by subparagraph (3)(1) will not prevent it designating an Early Termination Date as a result of the occurrence of the Additional Termination Event in subparagraph (3)(2).
5.      With respect to a Relevant Clearable Transaction and without prejudice to subparagraph (3)(2)(A), in the event that the parties have taken action under subparagraph (3)(1) to ensure that such Relevant Clearable Transaction is Cleared by the Relevant Transaction Clearing Deadline Date but such Relevant Clearable Transaction is not Cleared by the Relevant Transaction Clearing Deadline Date for reasons set out in any execution and give-up agreement (howsoever described) between the parties, the consequences of such Relevant Clearable Transaction not being Cleared by the Relevant Transaction Clearing Deadline Date will be the consequences set out in the relevant execution and give-up agreement (howsoever described) between the parties and the Additional Termination Event in subparagraph (3)(2)(A) will not apply.

		
(c)	Escrow: If (by reason of the time difference between the cities in which payments or deliveries are to be made or otherwise), it is not possible for simultaneous payments or deliveries to be made on any date on which both parties are required to make payments or deliveries hereunder, either party may at its option and in its sole discretion notify the other party that payments or deliveries on such date are to be made in escrow. In such case, the deposit of the payment or delivery due earlier on that date shall be made by 2.00 p.m. (local time at the place for the earlier payment or delivery) on that date with an escrow agent selected by the notifying party, provided this escrow agent is independent of either party and has a long term credit rating of at least A3 (Moody's) or A- (S&P), as the case may be, accompanied by irrevocable payment or delivery instructions:	
(i)      To release the deposited payment or delivery to the intended recipient upon receipt by the escrow agent of the required deposit of the corresponding payment or delivery from the other party on the same date accompanied by irrevocable payment or delivery instructions to the same effect, or
(ii)      If the required deposit of the corresponding payment or delivery is not made on the same date, to return the payment or delivery deposited to the party that paid or delivered into escrow.
The notifying party shall pay the costs of the escrow arrangements and shall cause those arrangements to provide that (A) in the case of a Payment obligation under Section 2 (a) (i), the intended recipient of the payment due to be deposited first shall be entitled to interest on that deposited payment for each day in the period of its deposit at the rate offered by the escrow agent for that date for overnight deposits in the relevant currency in the office where it holds the deposit payment (at 11:00 a.m. local time on that day) if the payment is not released by 5:00 p.m. local time on the date it is deposited for any reason other than the intended recipient´s failure to make the escrow deposit it was required to make in a timely manner, and (B) in the case of a delivery obligation under Section 2 (a) (i), the intended recipient of the delivery due to be deposited first shall be entitled to compensation as and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement if the deposited deliver is not released by 5:00 p.m. local time on the date it is deposited for any reason other than the intended recipient´s failure to make the escrow deposit it was required to make in a timely manner.

(d)	Scope of the Agreement: Notwithstanding anything contained in this Master Agreement to the contrary, if the parties enter into any of the following transactions, including an agreement with respect to any such transaction, (whether before or after this Agreement is entered to): a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) and any combination of these transactions, such transaction shall, unless such confirmation specifically states to the contrary, be subject to, governed by and construed in accordance with, the terms of this Agreement even when not so specified in the confirmation relating thereto. Each such transaction shall be a Transaction and any document or other confirming evidence exchanged between the parties confirming each such transaction shall be a Confirmation for the purposes of this Agreement.	
From the date hereof, all Transactions entered into prior to the date hereof between the parties hereto shall be governed by and construed in accordance with this Agreement, notwithstanding the terms of any agreement or confirmation which purports to govern the same. Each agreement or confirmation governing any Transaction entered into prior to the date hereof shall constitute a supplement to, and form a part of, this Agreement, and will be read and construed as one with this Agreement, and all such agreements and confirmations constitute a single agreement.

		
(e)	The parties agree that the definitions and provisions contained in Annexes (1 to 5) and Section 6 of the EMU Protocol published by the International Swaps and Derivatives Association, Inc. on May 6, 1998 are incorporated into and apply to this Agreement. References in those definitions and provisions to any “ISDA Master Agreement” will be deemed to be references to this Agreement.	
		
(f)	Contractual Recognition of Bail-in	
Each party acknowledges and accepts that liabilities arising under this agreement may be subject to the exercise of the Bail-in Power by the relevant resolution authority and acknowledges and accepts to be bound by any Bail-in Action Termination and the effects thereof, which may include, without limitation:
(a) the early termination and valuation of all transactions (or all transactions relating to one or more netting sets, as applicable) under this agreement; and
(b) if the Bail-in Termination Amount is determined to be payable by the BRRD Party to the Creditor Counterparty pursuant to any such Bail-in Action Termination:
(i) a reduction, in full or in part, of the Bail-in Termination Amount;
(ii) a conversion of all, or a portion of, the Bail-in Termination Amount into shares or      other instruments of ownership, in which case the Creditor Counterparty acknowledges      and accepts that any such shares or other instruments of ownership may be issued to or      conferred upon it as a result of the Bail-in Action Termination; and/or
(iii) a variation, modification and/or amendment to the terms of this agreement as may      be necessary to give effect to any such Bail-in Action Termination.
(2)Each party acknowledges and accepts that this provision is exhaustive on the matters described herein to the exclusion of any other agreements, arrangements or understanding between the parties relating to the subject matter of this agreement and that no further notice shall be required between the parties pursuant to the agreement in to order to give effect to the matters described herein.
For the purposes of the above:

	“ Bail-in Action Termination ” means the exercise of any Bail-in Power by the relevant resolution	
authority in respect of all transactions (or all transactions relating to one or more netting sets, as applicable) under this agreement.
“ Bail-in Termination Amount ” means the early termination amount or early termination amounts (howsoever described), together with any accrued but unpaid interest thereon, determined pursuant to the Bail-in Action Termination in respect of all transactions (or all transactions relating to one or more netting sets, as applicable) under this agreement (before, for the avoidance of doubt, any such amount is written down or converted by the relevant resolution authority).
“ BRRD ” means Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.
“ BRRD Party ” means the party in respect of which the Bail-in Power has been exercised by the relevant resolution authority.
“ Creditor Counterparty ” means the party which is not the BRRD Party.

		
	“ Bail-in Power ” means any write-down or conversion power existing from time to time (including for this purpose, without limitation, any power to terminate and value transactions and any power to amend or alter the maturity of eligible liabilities of an institution under resolution or amend the amount of interest payable under such eligible liabilities or the date on which interest becomes payable, including by suspending payment for a temporary period) under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in Spain:	
(a) relating to the transposition of the BRRD as amended from time to time, including but not limited to, Law 11/2015 of 18 June as amended from time to time, and the instruments, rules and standards created thereunder, and
(b) constituting or relating to the SRM Regulation as amended from time to time, in each case, pursuant to which the obligations of a regulated entity (or other affiliate of a regulated entity) can be reduced (including to zero), cancelled or converted into shares, other securities, or other obligations of such regulated entity or any other person.
A reference to a “regulated entity” is to an entity subject to the scope of application of Law 11/2015 which includes certain credit institutions, investment firms, and certain of their parent or holding companies and, with respect to the SRM Regulation, to any entity referred to in Article 2 of the SRM Regulation.
“ SRM Regulation ” means Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010

Part 6
Additional Terms for Foreign Exchange and Foreign Exchange Option Transactions

		
(a)	Incorporation of Definitions.  The 1998 FX and Currency Option Definitions (the “FX Definitions” ), published by the International Swaps and Derivatives Association, Inc., the Emerging Markets Traders Association and The Foreign Exchange Committee, are hereby incorporated by reference with respect to FX Transactions (as defined in the FX Definitions) and Currency Option Transactions (as defined in the FX Definitions). Terms defined in the FX Definitions shall have the same meanings in this Part 6.	

(b)	Scope. Unless otherwise agreed in writing by the parties, each FX Transaction and Currency Option Transaction entered into between the parties before, on or after the date of this Agreement shall be a Transaction under this Agreement and shall be part of, subject to and governed by this Agreement. FX Transactions and Currency Option Transactions shall be part of, subject to and governed by this Agreement even if the Confirmation in respect thereof does not state that such FX Transaction or Currency Option Transaction is subject to or governed by this Agreement or does not otherwise reference this Agreement.	
When an FX Transaction or a Currency Option is confirmed by means of exchange of electronic messages on an electronic messaging system or other document or other confirming evidence

exchanged between the parties confirming such Transaction, such messages, document or evidence will constitute a Confirmation for the purposes of this Agreement even where not so specified therein.

(c)	Premium Netting.  If, on any date, and unless otherwise mutually agreed by the parties, Premiums would otherwise be payable hereunder in the same Currency between the same respective offices of the parties, then, on such date, each party’s obligation to make payment of such Premiums will be automatically satisfied and discharged and, if the aggregate Premiums that would otherwise have been payable by such office of one party exceeds the aggregate Premiums that would otherwise have been payable by such office of the other party, replaced by an obligation upon the party by whom the larger aggregate Premiums would have been payable to pay the other party the excess of the larger aggregate Premiums over the smaller aggregate Premiums, and if the aggregate Premiums are equal, no payment shall be made.	

(d)	Payment Netting of FX Transactions and Currency Option Transactions.  Multiple Transaction Payment Netting shall not apply to FX Transactions or Currency Option Transactions. Unless otherwise mutually agreed by the parties, if on any date more than one delivery of a particular Currency is to be made between a pair of offices with respect to settlement of FX Transactions or Currency Option Transactions (but excluding payments with respect to option premiums and cash settled options), then each party shall aggregate the amounts of such Currency deliverable by it and only the difference between these aggregate amounts shall be delivered by the party owing the larger aggregate amount to the other party, and, if the aggregate amounts are equal, no delivery of the Currency shall be made.	

(e)	Payment Instructions.  All payments to be made hereunder in respect of FX and Currency Option Transactions shall be made in accordance with standing payment instructions provided by the parties from tune to time in writing (or as otherwise specified in a Confirmation).	

(f)	Automatic Exercise.  Article 3, Section 3.6(c)(i), line six of the FX Definitions which currently reads “one percent of the Strike Price” shall be amended to read “0.5% of the Strike Price,”	

(g)	Terms Relating to Premium.  Article 3, Section 3.4. of the FX Definitions is hereby amended by the addition of the following as a new paragraph (c) of the FX Definitions.	

“(c)      Premium: Failure to Pay on Premium Payment Date.  If any Premium is not received on the Premium Payment Date, the Seller may elect: (i) to accept a late payment of such Premium; (ii) to give written notice of such non-payment and, if such payment shall not be received within two (2) Local Business Days of such notice, treat the related Currency Option as void; or (iii) to give written notice of such non-payment and, if such payment shall not be received within two (2) Local Business Days of such notice, treat such non-payment as an Event of Default under Section 5(a)(i). If the Seller elects to act under either clause (i) or (ii) of the preceding sentence, the Buyer shall pay all out-of-pocket costs and actual damages incurred in connection with such unpaid or late Premium or void Currency Option, including, without limitation, interest on such Premium in the same currency as such Premium at the then prevailing market rate and any other costs or expenses incurred by the Seller in covering its obligations (including without limitation, a delta hedge) with respect to such currency Option.”

IN WITNESS WHEREOF, the parties have executed this Schedule by their duly authorized officers as of the date hereof:

		
 	 	
BANCO BILBAO VIZCAYA	
ARGENTARIA, S.A. (PARTY A)	
 	 	
By:	/s/ KRISTEN HOLM	
Name:	Kristen Holm	
Title:	Managing Director	
Date:	May 26, 2016	
 	 	
By:	 	
Name:	 	
Title:	 	
Date:	 	
 	 	
EACH ENTITY LISTED IN EXHIBIT A	
 	 	
AS PARTY B	
 	 	
LKQ Corporation	
By:	/s/ DOMNICK P. ZARCONE	
Name:	Dominick P. Zarcone	
Title:	Executive Vice President and Chief Financial Officer	
Date:	May 26, 2016	
 	 	
EURO CAR PARTS LImited	
By:	/s/ JOHN QUINN	
Name:	John Quinn	
Title:	CEO & Managing Director, LKQ Europe	
Date:	May 26, 2016	
 	 	
Keystone Automotive Industries ON, Inc.	
By:	/s/ MICHAEL S. CLARK	
Name:	Michael S. Clark	
Title:	Vice President — Finance and Controller	
Date:	May 26, 2016	

EXHIBIT A

Each Entity that is a Party B:

	
			
Name of Party B	Domicile	LKQ Corporation Guarantee Applies	
LKQ Corporation	State of Delaware, USA	No	
Euro Car Parts Limited	England and Wales	Yes	
Keystone Automotive Industries ON, Inc.	Province of Ontario, Canada	Yes	

Exhibit 31.1

CERTIFICATION
I, Robert L. Wagman, certify that:
1. I have reviewed this annual report on Form 10-Q of LKQ Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
August 2, 2016

	
		
/s/ ROBERT L. WAGMAN	 	
Robert L. Wagman	 	
President and Chief Executive Officer	 	

Exhibit 31.2

CERTIFICATION
I, Dominick Zarcone, certify that:
1. I have reviewed this annual report on Form 10-Q of LKQ Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
August 2, 2016

	
		
/ S / DOMINICK ZARCONE	 	
Dominick Zarcone	 	
Executive Vice President and Chief Financial Officer	 	

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of LKQ Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, as President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
		
(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and	
		
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	
Dated: August 2, 2016

	
		
 	/ S / ROBERT L. WAGMAN	
 	Robert L. Wagman	
 	President and Chief Executive Officer	

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of LKQ Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, as Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
		
(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and	
		
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	
Dated: August 2, 2016

	
		
 	/ S / DOMINICK ZARCONE	
 	Dominick Zarcone	
 	Executive Vice President and Chief Financial Officer